Edgar Filing: ALLEN TELECOM INC

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 28, 2002

REGISTRATION NO. 333-82696

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1

FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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ALLEN TELECOM INC.
(Exact Name of Registrant as Specified in Its Charter)

DELAWARE 38-0290950
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)

25101 CHAGRIN BOULEVARD, SUITE 350
BEACHWOOD, OHIO 44122
(216) 765-5800
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
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LAURA C. MEAGHER, ESQ.
GENERAL COUNSEL AND SECRETARY
ALLEN TELECOM INC.
25101 CHAGRIN BOULEVARD, SUITE 350
BEACHWOOD, OHIO 44122
(216) 765-5818
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
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COPIES TO:

CHRISTOPHER M. KELLY, ESQ. PAUL JACOBS, ESQ.
JONES, DAY, REAVIS & POGUE WARREN J. NIMETZ, ESQ.
NORTH POINT FULBRIGHT & JAWORSKI L.L.P.
901 LAKESIDE AVENUE 666 FIFTH AVENUE
CLEVELAND, OHIO 44114-1190 NEW YORK, NEW YORK 10103
(216) 586-3939 (212) 318-3384

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective.

If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE
SECURITIES MAY NOT BE SOLD NOR MAY ANY OFFERS TO BUY BE ACCEPTED UNTIL THIS
REGISTRATION STATEMENT HAS BEEN DECLARED EFFECTIVE BY THE SEC. THIS PROSPECTUS
IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN
OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE SUCH OFFER OR SALE IS
NOT PERMITTED.

SUBJECT TO COMPLETION, DATED FEBRUARY 28, 2002

PROSPECTUS

1,000,000 SHARES
ALLEN TELECOM INC.

[ALLEN TELECOM LOGO]
SERIES D % CONVERTIBLE PREFERRED STOCK
(LIQUIDATION PREFERENCE $50.00 PER SHARE)
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We are offering 1,000,000 shares of our Series D % convertible preferred
stock. The annual dividend on each share of convertible preferred stock is
$ and is payable quarterly in cash, common stock or a combination of cash
and common stock, in arrears, on each February 15, May 15, August 15 and
November 15, commencing 15, 2002. If our board of directors does not declare
a dividend, declares a partial dividend or we fail to pay a dividend declared by
our board for any dividend period, you will not be entitled to receive the
undeclared or unpaid dividend amount for that dividend period and such
undeclared or unpaid dividend amount will not accumulate, but the number of
shares of our common stock that you will be entitled to receive upon conversion
of your shares of convertible preferred stock will automatically increase, as
described below.

Each share of convertible preferred stock will initially be convertible at
your option at any time into shares of our common stock, which is
calculated by dividing the liquidation preference, $50.00, by an initial
conversion price of $ per share of common stock. The conversion price will be
adjusted as described in this prospectus upon the occurrence of certain change
of control transactions or other events. If our board does not declare a
dividend, declares a partial dividend or we fail to pay a dividend declared by
our board for any dividend period, the conversion ratio, which is initially the
number of shares of our common stock equal to the liquidation preference divided
by the initial conversion price, will automatically increase by 115% of the
number of shares of common stock that we would have been required to issue as a
stock dividend on each share of convertible preferred stock to pay the
undeclared or unpaid dividend amount for that dividend period in full. This
automatic increase in the conversion ratio will occur each time our board does
not declare a dividend, declares a partial dividend or we fail to pay a dividend
declared by our board for a dividend period, and such conversion ratio increases
will accumulate.

The shares of convertible preferred stock are mandatorily redeemable by us
for cash at their liquidation preference on or after February , 2014, and are
not redeemable by us before that date.

On or after February , 2005, if the closing price of our common stock
equals or exceeds 125% of the conversion price for 20 trading days during any
consecutive 30 trading day period, we may, at our option, cause the convertible
preferred stock to be automatically converted into shares of our common stock at
the then prevailing conversion ratio. In addition, on or after February , 2006,
if fewer than 100,000 shares of convertible preferred stock are outstanding, we
may, at our option, cause the outstanding shares of convertible preferred stock
to be automatically converted into shares of our common stock as described in
this prospectus.

All shares of our common stock that we issue upon conversion of or in
payment of a dividend on the convertible preferred stock will be freely
transferable without restriction under the Securities Act.

Our common stock is quoted on the New York Stock Exchange and the Pacific
Exchange under the symbol "ALN." On February 27, 2002, the last reported sale
price of our common stock as reported on the New York Stock Exchange was $7.19
per share.

The underwriters may, under certain circumstances, purchase from us up to an
additional 150,000 shares of convertible preferred stock to cover
over-allotments.

SEE "RISK FACTORS" BEGINNING ON PAGE 12 OF THIS PROSPECTUS FOR A DISCUSSION
OF RISKS THAT SHOULD BE CONSIDERED BY INVESTORS BEFORE BUYING OUR CONVERTIBLE
PREFERRED STOCK.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

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PER SHARE TOTAL
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Public offering price....................................... $ $
Underwriting discount....................................... $ $
Proceeds, before expenses, to us............................ $ $

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The underwriters expect to deliver the shares of convertible preferred stock
in book-entry form only through the facilities of the Depository Trust Company
in New York, New York on , 2002.

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Sole Book-Running Manager

BEAR, STEARNS & CO. INC.
--------------------------------

MCDONALD INVESTMENTS INC.

A.G. EDWARDS & SONS, INC.

NEEDHAM & COMPANY, INC.

H.C. WAINWRIGHT & CO., INC.

Prospectus dated , 2002

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus.
An investment in the convertible preferred stock involves significant risks. In
addition to reviewing other information contained or incorporated by reference
in this prospectus, you should carefully consider the information in the section
captioned "Risk Factors" beginning on page 12 before deciding to purchase the
convertible preferred stock.

ALLEN TELECOM INC.

We are a leading global provider of wireless infrastructure equipment and
services to many of the world's largest wireless communications carriers, or
carriers, and original equipment manufacturers, or OEMs. Our business is aligned
around the five product lines highlighted below:

- Base Station Subsystems and Components;

- Repeaters and In-Building Coverage Products;

- Base Station and Mobile Antennas;

- Geolocation Products; and

- Wireless Engineering and Consulting Services.

Our products and services are integral to mobile wireless communications
networks and offer our customers the ability to build networks that enhance
network capacity, coverage and performance. Our products and services are
designed for use in current wireless networks as well as next-generation
wireless networks. As a leading global provider of wireless infrastructure
equipment and services, we expect that demand for our products and services will
continue to be driven by the continuing investment by carriers in their wireless
networks in order to expand coverage and capacity and improve performance. We
believe that the catalysts for future carrier investment include continued
growth in wireless subscribers, increased minutes of use, or MOUs, and expanded
usage of wireless devices for data services. We believe that our broad suite of
products, as well as our experience, reputation and customer relationships,
position us to benefit from the build out of next-generation networks such as
2.5G and 3G.

Carriers are currently in the process of determining their migration paths
to the next-generation networks. 2.5G is an intermediary, higher data capacity
solution while 3G is the next major technological evolution of wireless networks
that is expected to provide even greater capacity to carriers' networks and
allow carriers to provide new features and services. By offering an enhanced set
of products and services to their end-user customers, carriers believe that they
will be able to generate additional average revenue per user. 3G infrastructure
equipment has begun to be deployed in parts of Europe and Asia. This deployment
will require new infrastructure equipment and therefore is expected to create
new product opportunities for us. We have developed and, in certain cases, have
already shipped 3G compatible products, including filters, duplexers, combiners,
base station antennas, power amplifiers, tower mounted amplifiers, repeaters and
test equipment. We also have developed a network-based geolocation solution that
enables carriers to determine the location of callers. Our network-based
geolocation solution is being deployed or evaluated by a number of carriers in
the U.S. that must comply with Federal Communications Commission, or FCC,
regulations requiring them to provide caller location information for wireless
911 calls. As described below in "-- Recent Developments," AT&T Wireless
Services, Inc. recently selected our GEOMETRIX wireless 911 caller location
systems for installation in selected AT&T Wireless networks. We expect our
geolocation business to meaningfully contribute to our overall financial
performance in the future as carriers are required to build out their
location-based capabilities.

We market our products and services to many of the world's largest OEMs,
including Alcatel SA, Lucent Technologies Inc., Motorola, Inc., Nokia
Corporation, Nortel Networks Corporation and Siemens AG, as well as the world's
largest carriers, including AT&T Wireless, Nextel Communications, Inc., Orange
SA, Sprint Corporation, Verizon Wireless and Vodafone Group plc. We conduct
operations globally, with manufacturing and assembly facilities in Australia,
Brazil, China, the Czech Republic, France, Germany, Italy, Mexico and the U.S.,
and have sales and marketing offices in 19 countries. Sales

made to customers located outside the U.S. accounted for 60.8% of our total
sales during 2001. Our total sales during 2001 were $394.6 million, generating
operating income of $7.5 million, as compared to total sales during 2000 of
$392.6 million, generating operating income of $27.4 million.

INDUSTRY DYNAMICS

Over the past 12 months, the end-users of our equipment, global carriers,
have been facing slowing subscriber growth rates, greater price competition,
reduced access to capital and the need to carefully manage their cash flow and
profitability. In response to these challenges, carriers are reducing their
capital spending and appear to be refocusing on projects that can most directly
contribute to their revenues. An independent study published by the Yankee Group
in September 2001 indicates the 2002 worldwide market for wireless
infrastructure to be approximately $100.1 billion, representing a slight
increase from approximately $99.4 billion in 2001. The same study indicates a
2004 market of approximately $120.2 billion. Over the longer term, we anticipate
capital investment growth to resume at an increased level due to a number of
factors, including a growing number of telecommunication subscribers, increasing
MOUs, and a growing demand for new services and features, such as mobile
messaging, Internet access and other data services that require additional
network capacity and capabilities.

In order to address these future network requirements, many carriers are
expected to ultimately spend a considerable amount of capital upgrading their
mobile networks to 3G, or third generation, technologies. These technologies
provide a number of advantages over current mobile network technologies,
including the ability to deliver voice, data and multimedia services, provide
incremental network capacity and improve operating efficiencies. The deployment
of 3G networks will require the timely development, manufacture and installation
of new or advanced equipment, including power amplifiers, base stations,
subsystems, antennas and repeaters that are specifically designed for the newly
licensed frequencies. Furthermore, 3G networks will require a greater number of
base stations per coverage area to provide a better link between mobile devices
and base stations. We believe we are well positioned to capitalize on the 3G
spending cycle.

We believe based on our recent contract wins with both Verizon Wireless and
AT&T Wireless that the market for ancillary wireless services, particularly E
911, is developing. As new wireless technologies advance in capability and the
number of subscribers grows, increased governmental focus in the U.S. is being
placed on automatically identifying the location of wireless 911 callers to the
local police or fire department. Previous solutions did not accurately identify
the location of the caller or dispatch center, creating a need for a more
effective solution. To promote the availability of accurate geolocation services
for wireless 911 calls in the U.S., the FCC has adopted regulations that require
carriers to begin implementing geolocation capabilities based on strict
standards. Equipment suppliers and carriers have been developing a variety of
network-based and handset-based solutions to provide enhanced 911, or E 911,
geolocation capabilities. Our network-based GEOMETRIX product is capable of
meeting the requirements established by the FCC and meeting the needs of mobile
carriers, putting us in a favorable position to capitalize on the growth of E
911 network spending.

STRATEGY

Our objective is to increase our presence as a major supplier of wireless
infrastructure to the world's leading OEMs and carriers and to increase the
breadth of our product offerings to these customers. By successfully executing
on this strategy, we believe that we will be well-positioned to increase
revenue, profit and stockholder value. Our strategy to achieve this objective is
to:

- LEVERAGE AND ENHANCE CUSTOMER RELATIONSHIPS. We have developed and
maintained in-depth working relationships with many of the leading OEMs
and carriers, the cornerstones of which are based on dependability,
responsiveness and innovation. We will strive to enhance these
relationships by providing top quality products and services, meeting our
customers' exacting specifications, offering flexible manufacturing
capacity, fostering collaborative development efforts and maintaining
dedicated local sales and customer service teams. We intend to accelerate
our growth and increase profitability by capitalizing on customer trends
to increase their outsourcing needs and by making our brands the products
and services of choice.

- MAXIMIZE OPERATING EFFICIENCIES. We satisfy our customers' demands for
innovative, cost effective products and solutions in a timely manner by
shortening product development cycles and providing flexible, low cost
manufacturing. To enhance these efficiencies, we continuously evaluate
and identify additional manufacturing facilities, suppliers and
subcontractors.

- EXPAND OUR GEOGRAPHIC REACH. We support our customers in their
geographic markets throughout the world. As worldwide expansion of
wireless communication networks continues, we believe that new market
opportunities and new potential customers will emerge. We intend to
continue to expand our sales, design, marketing, manufacturing and
service capabilities into international markets in response to our
existing customers' needs and new business opportunities. Our presence in
the local markets of our customers allows us to quickly respond to their
needs and requests, which we believe provides us with a key competitive
advantage.

- EXPAND AND ENHANCE OUR PRODUCT AND SERVICE OFFERINGS VIA MARKET-FOCUSED
RESEARCH AND DEVELOPMENT. We have successfully developed and introduced
new products and services that are responsive to changing customer
specifications and evolving industry standards. We intend to continue to
expand our product offerings by applying our industry experience and our
design and manufacturing expertise to our continuing research and
development efforts. We will leverage our collaborative product
development relationships and radio frequency, or RF, technology
expertise to expand and enhance our product offerings, such as E 911
geolocation and next-generation power amplifiers, and to develop
innovative solutions for our customers.

- CAPITALIZE ON 3G OPPORTUNITIES. We believe that our 3G initiatives will
enable us to maintain our leadership position as a supplier of products
to OEMs and carriers. We intend to leverage our high quality,
long-standing relationships with our customers to ensure that we are a
provider of choice when our customers seek 3G products.

- PURSUE STRATEGIC ACQUISITIONS. We have accelerated our growth in the
wireless communications industry through strategic acquisitions of
businesses and products that we have successfully integrated into our
other businesses. To supplement our internal growth, we intend to
continue to pursue acquisitions that provide us with new customers,
products or services, geographic markets or technologies that complement
our existing offerings.

RECENT DEVELOPMENTS

Amendment to Revolving Credit Facility

We recently entered into an amendment to our revolving credit facility,
dated as of December 31, 2001, that modified the financial covenants contained
therein to levels we believe could be achieved under current market conditions.
The amendments permit us to maintain a higher leverage ratio, set lower
benchmarks for earnings before interest, income taxes, depreciation and
amortization, and establish lower minimum fixed charge coverage ratios over
several time periods through mid- to late 2003. We also agreed to cause some of
our domestic subsidiaries to guarantee our obligations under our revolving
credit facility, to pledge some of the stock of our foreign subsidiaries and to
place a mortgage on certain real estate owned by us. We entered into the
amendment because of concerns regarding our ability to meet the financial
covenants contained in our revolving credit facility.

The amendment to our revolving credit facility also requires us to
permanently reduce the commitment under that facility upon the consummation of
this offering by an amount equal to the lesser of (i) 60% of the net proceeds of
this offering or (ii) $30.0 million.

Agreement with AT&T Wireless

AT&T Wireless recently selected our GEOMETRIX wireless 911 caller location
systems from our Grayson Wireless Division for installation in selected AT&T
Wireless networks.

The network-based GEOMETRIX systems are compatible with AT&T Wireless' TDMA
(digital) and AMPS (analog) network technologies and customer handsets. AT&T
Wireless has agreed to

install the GEOMETRIX systems pursuant to the FCC's Phase II E 911 regulations.
The system automatically locates and forwards the caller position information to
public safety agencies that receive 911 calls.

AT&T Wireless customers will be able to use their existing handsets and
current 911 calling procedures. To maintain caller privacy, GEOMETRIX systems
are designed to provide location information only when a caller initiates a 911
call.

The GEOMETRIX system is intended to allow carriers to meet the FCC's Phase
II requirements for most wireless E 911 callers. The GEOMETRIX system is the
first Phase II-compliant wireless location system to be placed into commercial
service, and to date remains the only Phase II-compliant system in service.

Patent Litigation

Completion of Bartley R.F. Systems, Inc. Acquisition

On December 18, 2001, we completed the acquisition of substantially all of
the assets of Bartley R.F. Systems, Inc., headquartered in Amesbury,
Massachusetts. Our current U.S. manufacturing facility for base station
subsystems and components in Sparks, Nevada will be consolidated into Bartley's
manufacturing facility for base station subsystems in Amesbury, Massachusetts.
This consolidation is expected to be completed early in the second quarter of
2002 and is projected to result in annual cost savings of approximately $4.0 to
$5.0 million. The acquisition is expected to be accretive to our earnings in its
first full year. In connection with the acquisition, we recorded a reserve for
restructuring costs of approximately $2.3 million in the fourth quarter of 2001.

The consideration for the acquisition included issuance of 2,271,391 shares
of our common stock and associated preferred stock purchase rights to Bartley
R.F. Systems, Inc. We have registered the resale of those shares.

ABOUT US

Allen Telecom was founded in 1928 as Allen Electric & Equipment Company. We
have repositioned our business through a series of strategic acquisitions and
divestitures during the 1990s and have been known as Allen Telecom Inc. since
February 1997. Our common stock was first listed on the New York Stock Exchange
in September 1971.

Our executive offices are located at 25101 Chagrin Boulevard, Beachwood,
Ohio 44122-5687, and our telephone number is (216) 765-5800.

Allen Telecom, Antenna Specialists, Comsearch, Decibel, Extend-A-Cell,
FOREM, GEOMETRIX, Grayson Wireless, MIKOM, On-Glass, Tekmar Sistemi and Telia
are our trademarks, registered trademarks, service marks or registered service
marks in the U.S. or other jurisdictions that are mentioned in this prospectus.
All other trademarks, servicemarks or trade names referred to in this prospectus
are the property of their respective owners.

THE OFFERING

Securities Offered............ 1,000,000 shares of Series D % convertible
preferred stock, or 1,150,000 shares if the
underwriters exercise their over-allotment
option in full.

Dividends..................... Annual dividends of $ per share, payable
quarterly on each February 15, May 15, August
15 and November 15, commencing 15, 2002,
when, as and if declared by our board of
directors. Dividends will be paid in arrears on
the basis of a 360-day year consisting of
twelve 30-day months. Dividends will be payable
from the most recent dividend payment date or,
in the case of the dividend payable on
15, 2002, from the original issue date of the
convertible preferred stock.

Dividends may be paid in cash, common stock or
a combination thereof. If we elect to pay any
portion of a dividend in common stock, we will
give notice of our election at least ten days
in advance of the record date for the relevant
dividend payment date. The number of shares of
common stock deliverable per share of
convertible preferred stock as a dividend
payment shall be equal to the difference
between the total declared dividend amount per
share of convertible preferred stock
($ , in the case of a full quarterly
dividend) and the amount of the cash dividend,
if any, to be paid with respect to each share
of convertible preferred stock, divided by 95%
of the average closing price of our common
stock for the 10 consecutive trading days
ending on and including the fifth trading day
before the dividend payment date. All shares of
common stock distributed on any dividend
payment date in payment of dividends on the
convertible preferred stock will be freely
transferable without restriction under the
Securities Act.

If our board does not declare a dividend,
declares a partial dividend or we fail to pay a
dividend declared by our board for any dividend
period, you will not be entitled to receive the
undeclared or unpaid dividend amount for that
period and such undeclared or unpaid dividend
amount will not accumulate, but the conversion
ratio per share of convertible preferred stock
described below under "-- Conversion Rights;
Conversion Ratio" shall automatically increase
on the dividend payment date on which such
undeclared or unpaid dividend amount would have
been paid by 115% of the number of shares of
common stock that we would have been required
to issue as a stock dividend on each share of
convertible preferred stock to pay the
undeclared or unpaid dividend amount for that
dividend period in full. This automatic
increase in the conversion ratio will occur
each time our board does not declare a
dividend, declares a partial dividend or we
fail to pay a dividend declared by our board
for a dividend period, and such conversion
ratio increases will accumulate until the
convertible preferred stock is converted or
redeemed or in the event of our liquidation,
winding up or dissolution. You will not be
entitled to receive any additional amount in
respect of undeclared or unpaid dividends if
you do not convert your shares

of convertible preferred stock into shares of
our common stock before a mandatory redemption
of the convertible preferred stock occurs or
before our liquidation, winding up or
dissolution.

Liquidation Preference........ $50.00 per share.

Ranking....................... The convertible preferred stock will, with
respect to dividend rights and rights upon our
liquidation, winding-up or dissolution, rank:

- senior to our common stock, our Series C
Junior Participating Preferred Stock and to
each other class of our capital stock or
series of preferred stock established by
our board after the original issue date of
the convertible preferred stock, the terms
of which do not expressly provide that it
ranks senior to or on parity with the
convertible preferred stock;

- on parity with any class of our capital
stock or series of preferred stock
established by our board after the original
issue date of the convertible preferred
stock, the terms of which expressly provide
that it will rank on parity with the
convertible preferred stock; and

- junior to each class of our capital stock
or series of preferred stock established by
our board after the original issue date of
the convertible preferred stock, the terms
of which expressly provide that it will
rank senior to the convertible preferred
stock.

All of our outstanding capital stock will rank
junior to the convertible preferred stock. Our
board of directors has authorized the issuance
of up to 500,000 shares of Series C Junior
Participating Preferred Stock in connection
with our share purchase rights plan, but no
such shares are outstanding, and we have no
other preferred stock outstanding.

Mandatory Redemption.......... Subject to legal availability of funds, shares
of convertible preferred stock are mandatorily
redeemable by us for cash at their liquidation
preference on February , 2014, and not
redeemable by us before that date.

Conversion Rights; Conversion
Ratio......................... Shares of convertible preferred stock will be
convertible at your option at any time into:

- shares of our common stock, which is
calculated by dividing the liquidation
preference per share of the convertible
preferred stock, $50.00, by the conversion
price, which is initially $ per share
of common stock; plus

- cash in lieu of any fractional share.

We refer to the number of shares of common
stock into which each share of convertible
preferred stock may be converted at any time,
based upon the prevailing conversion price, as
the conversion ratio. The conversion ratio will
automatically increase if our board does not
declare a dividend, declares a partial dividend
or we fail to pay a dividend declared by our
board for any dividend period, as described
above under "-- Dividends."

We will furnish you written notice of any
automatic increase in the conversion ratio, as
described under "Description of the Convertible
Preferred Stock -- Conversion Rights;
Conversion Ratio."

The conversion price is subject to adjustment
upon the occurrence of certain change of
control transactions or other events described
in this prospectus. Any adjustment to the
conversion price will result in a change in the
conversion ratio.

All shares of common stock distributed upon any
conversion of the convertible preferred stock,
at your election or mandatorily by us as
described below, will be freely transferable
without restriction under the Securities Act.

Mandatory Conversion.......... On or after February , 2005, we may, at our
option, cause all, but not a portion, of the
outstanding shares of convertible preferred
stock to be automatically converted into that
number of shares of common stock for each share
of convertible preferred stock equal to the
then prevailing conversion ratio. We may
exercise that conversion right if, for at least
20 trading days within any consecutive 30-day
trading period (including the last trading day
of such period), the closing price of our
common stock equals or exceeds 125% of the then
prevailing conversion price of the convertible
preferred stock.

On or after February , 2006, if there are
less than 100,000 shares of the convertible
preferred stock outstanding, we may, at our
option, cause each outstanding share of
convertible preferred stock to be automatically
converted into the lesser of:

- the number of shares of common stock equal
to the then prevailing conversion ratio;
and

- the number of shares of common stock equal
to the liquidation preference, $50.00,
divided by the market value of the common
stock (determined as described in this
prospectus), plus the aggregate number of
shares of common stock by which the
conversion ratio has been increased in
respect of undeclared or unpaid dividends
through the date of mandatory conversion.

Change of Control............. Except as provided below, upon a change of
control, you shall, in the event that the
liquidation preference, $50.00, divided by the
market value of our common stock (determined as
described in this prospectus) at such time plus
the aggregate number of shares of common stock
by which the conversion ratio has been
increased in respect of undeclared or unpaid
dividends is greater than the then prevailing
conversion ratio, have a one-time option to
convert each share of convertible preferred
stock held by you into a number of shares of
common stock equal to the liquidation
preference, $50.00, divided by an adjusted
conversion price equal to the greater of:

- the market value of the common stock
(determined as described in this
prospectus) as of the date of the change of
control; and
7

- $ , which is 66 2/3% of the recent
common stock price set forth on the cover
of this prospectus,

plus, in either case, the aggregate number of
shares of common stock by which the conversion
ratio has been increased in respect of
undeclared or unpaid dividends through the
change of control date.

In lieu of converting the convertible preferred
stock into shares of common stock in the event
of a change of control, we may, at our option,
redeem each share of convertible preferred
stock for cash equal to the market value as of
the change of control date multiplied by the
number of the shares of common stock that would
be issuable upon conversion of each share of
convertible preferred stock as described in the
preceding paragraph.

Voting Rights; Amendments..... Except as required by Delaware law or our
certificate of incorporation, which includes
the certificate of designation for the
convertible preferred stock, the holders of
convertible preferred stock will have no voting
rights. The certificate of designation will
provide that if we fail to pay the full
dividend payable to the holders of the
convertible preferred stock for each of six
consecutive dividend periods and at least
100,000 shares of convertible preferred stock
are outstanding, then the holders of the
convertible preferred stock, voting separately
as one class, will be entitled at our next
regular or special meeting of stockholders to
elect one additional director to our board of
directors. Upon the election of this additional
director, the number of directors that compose
our board of directors will be increased by one
director. Such voting rights and the term of
any director so elected will continue until
such time as fewer than 100,000 shares of the
convertible preferred stock are outstanding,
such time as the outstanding shares of
convertible preferred stock have been
mandatorily converted or redeemed, or our
liquidation, winding-up or dissolution,
whichever is earliest. The affirmative consent
of holders of at least 66 2/3% of the
outstanding convertible preferred stock will be
required for the issuance of any class or
series of stock (or security convertible into
stock) ranking senior to the convertible
preferred stock as to dividend rights or rights
upon our liquidation, winding-up or dissolution
and for amendments to our certificate of
incorporation or by-laws that would materially
affect the existing terms of the convertible
preferred stock.

Use of Proceeds............... The net proceeds to us from the sale of the
convertible preferred stock in this offering
are estimated to be $ million, after
deducting discounts to the underwriters and the
estimated expenses of the offering, or
$ if the underwriters exercise the
over-allotment option in full. We will use a
portion of the net proceeds from this offering
to repay a portion of the indebtedness
outstanding under our revolving credit
facility. We may also use a portion of the net
proceeds from this offering for working capital
and other corporate purposes, including capital
expenditures, payment of interest or additional
indebtedness, acquisitions of businesses or
assets and investments.

Tax Consequences.............. Certain U.S. federal income tax considerations
relevant to the purchase, ownership and
disposition of our convertible preferred stock
and common stock issued upon its conversion are
described in "Certain United States Federal
Income Tax Considerations." Prospective
investors are advised to consult with their own
tax advisors regarding the tax consequences of
acquiring, holding or disposing of our
convertible preferred stock and common stock
issued upon its conversion in light of current
tax laws, their particular personal investment
circumstances and the application of state,
local and other tax laws, including
consequences resulting from the possibility
that actual or constructive distributions on
the convertible preferred stock may exceed our
current and accumulated earnings and profits,
as calculated for U.S. federal income tax
purposes, in which case they would not be
treated as dividends for U.S. federal income
tax purposes.

Book-Entry, Delivery and
Form.......................... The Depository Trust Company, or DTC, will act
as securities depositary for the convertible
preferred stock. Initially, the convertible
preferred stock will be represented only by one
or more fully-registered global security
certificates registered in the name of Cede &
Co., the nominee of DTC, and deposited with
DTC.

Trading....................... Our common stock currently is quoted on the New
York Stock Exchange and the Pacific Exchange
under the symbol "ALN." We have not applied and
do not intend to apply for the listing of the
convertible preferred stock on any securities
exchange.

SUMMARY CONSOLIDATED FINANCIAL DATA

The summary consolidated financial data presented below is derived from our
consolidated financial statements. You should read the following information in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the historical consolidated financial statements
and the notes thereto contained in and incorporated by reference in this
prospectus. The information under "As Adjusted" in the Consolidated Balance
Sheet Data below reflects the issuance of the convertible preferred stock
offered in this offering and our receipt of $ million of net proceeds
after deducting underwriting discounts and commissions and estimated offering
expenses payable by us and the use of a portion of such net proceeds to repay a
portion of the indebtedness outstanding under our revolving credit facility.

YEAR ENDED DECEMBER 31,
---------------------------------------
1999 2000 2001
----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

CONSOLIDATED STATEMENTS OF OPERATIONS:
Sales..................................................... $ 336,213 $ 392,608 $ 394,601
Cost of sales............................................. (247,064) (277,666) (296,342)
--------- --------- ---------
Gross profit.............................................. 89,149 114,942 98,259
Operating expenses:
Selling, general and administrative expenses............ (54,819) (54,271) (56,776)
Research and development and product engineering
costs................................................ (27,946) (25,442) (26,086)
Amortization of goodwill................................ (7,020) (7,822) (7,901)
--------- --------- ---------
Operating (loss) income................................... (636) 27,407 7,496
Other income, net......................................... 3,370 -- --
Net interest expense...................................... (8,146) (9,033) (10,247)
--------- --------- ---------
(Loss) income before taxes and minority interests......... (5,412) 18,374 (2,751)
Benefit from (provision for) income taxes................. 1,844 (7,530) 1,073
Minority interests........................................ (1,650) (91) (145)
--------- --------- ---------
(Loss) income from continuing operations.................. (5,218) 10,753 (1,823)
Discontinued operations -- gain on disposal of emission
testing business........................................ 2,363 1,300 --
--------- --------- ---------
Net (loss) income......................................... $ (2,855) $ 12,053 $ (1,823)
========= ========= =========
Basic and diluted (loss) earnings per common share:
(Loss) income from continuing operations................ $ (0.19) $ 0.38 $ (0.06)
Discontinued operations -- gain on disposal of emission
testing business..................................... 0.09 0.05 --
--------- --------- ---------
Net (loss) income......................................... $ (0.10) $ 0.43 $ (0.06)
========= ========= =========
Weighted average shares outstanding
Basic................................................... 27,480 27,820 28,090
Diluted................................................. 27,480 28,270 28,090

DECEMBER 31, 2001
-----------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)

CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 16,368
Working capital............................................. 162,797
Total assets................................................ 511,956
Total debt.................................................. 152,848
Total redeemable convertible preferred stock................ --
Total stockholders' equity.................................. 258,357

RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS

The following table shows our unaudited ratio of earnings to combined fixed
charges and preferred stock dividends for the periods shown.

YEARS ENDED DECEMBER 31,
------------------------------------------------
1997 1998 1999 2000 2001
---- ---- ---- ---- --------------------
ACTUAL AS ADJUSTED
------ -----------

8.3x -- -- 2.4x --

The ratio of earnings to combined fixed charges and preferred stock
dividends has been computed by dividing combined fixed charges and preferred
stock dividends into earnings from continuing operations before income taxes and
minority interests plus fixed charges. Fixed charges include interest expense,
interest capitalized, amortization of debt issuance costs and the assumed
interest component of lease rental expense.

For the years ended December 31, 1998, 1999 and 2001, our earnings were
insufficient to cover our combined fixed charges and preferred stock dividends
by approximately $8,840,000, $5,412,000 and $2,751,000, respectively.

RISK FACTORS

An investment in the convertible preferred stock involves significant
risks. In addition to reviewing other information in this prospectus, you should
carefully consider the following factors before deciding to purchase the
convertible preferred stock. This prospectus contains forward-looking statements
that involve risk and uncertainties. We use words such as "anticipate,"
"believe," "plan," "expect," "future," "intend" and similar expressions to
identify forward-looking statements. Our actual results could differ from those
anticipated in these forward-looking statements as a result of certain factors,
including the risks described below and elsewhere in this prospectus. Except as
required by law, we disclaim any obligation to update information contained in
any forward-looking statement.

RISKS RELATED TO OUR BUSINESS

OUR DEPENDENCE ON A SMALL NUMBER OF CUSTOMERS COULD IMPACT OUR RESULTS.

We generate a significant amount of our sales from a limited group of
customers. For 2001, our top ten customers comprised 55.2% of our sales, with
one customer accounting for 10.2% of our total sales. We anticipate that we will
continue to generate significant sales from a relatively small group of
customers. Although we have purchase contracts with many of our large customers,
these customers are not obligated to purchase our products and can effectively
cancel these contracts at any time. If any of these customers ceases to do
business with us or cancels, reduces or delays orders or product purchases, our
sales would be significantly reduced. We have in the past lost a significant
amount of sales when a key customer delayed acceptance of our products, reduced
product requirements or ceased purchasing our products. This risk is greater due
to the trend of consolidation in the telecommunications industry. We and one or
more of our competitors may each supply products to companies that have merged
or will merge. Consolidations could result in purchasing decision delays by
merged companies and/or our playing a lesser role in the supply of
communications products to merged companies, and could have a material adverse
effect on our business, results of operations and financial condition.

Many of our components and subsystems must be custom designed for use in
our customers' products. As a result, we must allocate our research and
development efforts and manufacturing capacity among our customers and potential
customers. We cannot be sure of the success of our customers' systems in the
market. In addition, recently some of our carrier and original equipment
manufacturer customers have experienced significant fluctuations in their stock
prices or difficulties in obtaining financing. Many of our customers have
recently extended their invoice payments and could continue to do so. If our
customers are not successful, the length of time required to re-engineer and
manufacture our products for another customer may delay our sales or prohibit us
from getting our products to the marketplace in a timely manner or at all. In
addition, any substantial or protracted delay in payments from our customers
could materially adversely affect our cash flows and results of operations.

WE MAY BE MATERIALLY AND ADVERSELY AFFECTED BY REDUCTIONS IN SPENDING ON
WIRELESS TELECOMMUNICATIONS INFRASTRUCTURE BY OUR CUSTOMERS.

Our business is dependent on continued capital spending by our end-users,
carriers. Continued constraints on their capital spending and the related
reduction in OEM demand could affect our revenues more than we currently expect.
The spending patterns of mobile carriers are very difficult to predict and can
lead to volatile operating results. In addition, there can be no certainty of
duration of industry adjustments and our business could be exposed to extended
downturns in capital spending, which could lead to materially reduced financial
performance.

THE MARKETS FOR OUR PRODUCTS AND SERVICES ARE HIGHLY COMPETITIVE.

The wireless communications infrastructure markets are highly competitive
and we expect competition to intensify. We compete with a number of companies,
including large infrastructure manufacturers, original equipment manufacturers,
systems integrators, base station subsystem suppliers, engineering

carriers and new market entrants. One way to maximize market growth, enhance
existing products and introduce new products in a competitive market is through
acquisitions of companies or their assets, such as our recent acquisition of the
assets of Bartley R.F. Systems, Inc., where advisable. These acquisitions may
cause certain of our other competitors to enter into additional business
combinations, to accelerate product development, or to engage in aggressive
price reductions or other competitive practices, creating even more powerful or
aggressive competitors. Many of our current and potential competitors have
greater financial, technical, manufacturing and marketing resources than we
have. Many of our current and potential competitors have also established, or
may in the future establish, relationships with our current and potential
customers. We may not be able to compete successfully against current and future
competitors, including companies that develop and market new wireless
communications products and services. These competitive pressures may result in
price reductions, reduced gross margins, longer sales cycles, reduced sales and
loss of customers.

CUSTOMER PRESSURE TO REDUCE PRICES AND LONG-TERM SUPPLY ARRANGEMENTS MAY CAUSE
REDUCTIONS IN OUR SALES OR OUR PROFIT MARGINS.

Many of our customers are under pressure to reduce the prices of their
products or services, and, therefore, we expect to continue to experience
pressure from our customers to reduce the prices of our products. Our customers
frequently negotiate supply arrangements with us well in advance of delivery
dates, requiring us to commit to price reductions before we can determine
whether we can achieve the cost reductions assumed for the product. In many of
our markets, average sales prices of established products have declined in the
past. We anticipate that prices will continue to decline, which could negatively
impact our sales and/or gross profit margins. Accordingly, to remain
competitive, we believe that we must continue to develop product enhancements
and new technologies that will either slow the price declines of our products or
reduce the cost of producing and delivering our products. If we fail to do so,
our results of operations and financial condition would be adversely affected.

IF WE DO NOT CORRECTLY ANTICIPATE DEMAND FOR OUR PRODUCTS AND SERVICES, WE MAY
NOT BE ABLE TO ARRANGE COST EFFECTIVE PRODUCTION OF OUR PRODUCTS OR WE COULD
HAVE COSTLY EXCESS INVENTORIES OR PRODUCTION.

Historically, we have experienced broad fluctuations in demand for our
products and services. The demand for our products and services depends on many
factors and is difficult to predict. We expect that it will become more
difficult to predict demand for specific products and services as we expand our
portfolio of wireless communications products and services and as competition in
the markets for our products and services intensifies.

If demand increases beyond what we anticipate, we would have to rapidly
arrange for increased production capacity. Rapid increases in production levels
to meet unanticipated demand could result in higher costs or declining
manufacturing yields, which could lower our profit margins. We also depend on a
number of third-party manufacturers and suppliers to provide manufacturing
services and necessary components, subsystems and raw materials. If these
manufacturers and suppliers cannot provide, or are delayed in providing, the
additional products or services, we may not be able to meet the unexpected
demand on a timely basis. If we are unable to meet the demands of our customers
on a timely basis, our results of operations would be adversely affected.

If demand does not develop as much as anticipated, we could have excess
inventories, which could reduce our cash flow and could lead to write-offs of
some or all of the costs. In addition, lower than anticipated demand could also
result in higher costs due to underutilization of our facilities and our
personnel and those of our contract manufacturers. We currently have excess
inventory for the base station subsystems and components product line. This
excess inventory adversely affected our results for the twelve months ended
December 31, 2001 and could materially adversely affect results in future
periods.

IF THE MARKETS FOR EXISTING AND EMERGING MOBILE WIRELESS COMMUNICATIONS, SUCH AS
3G AND E 911 PRODUCTS, DO NOT GROW OR DEVELOP, OUR RESULTS OF OPERATIONS WOULD
BE ADVERSELY AFFECTED.

The markets for mobile wireless communications have experienced significant
growth in recent years. This growth, however, is dependent on the economic
condition of the world and national markets, the availability and cost of
capital and financing to carriers and the timing and level of purchases of both
current and planned products and services. We cannot assure you that the markets
for our products will continue to grow, that potential customers will adopt our
products for integration with their wireless communications solutions or that we
will be successful in independently establishing markets for our products.

The success of our business depends on the capacity, affordability and
reliability of the services provided by various carriers. Currently, a number of
domestic and foreign carriers incorporate our products in their wireless
networks. Growth in demand for these services may be limited if carriers fail to
offer services and pricing that customers consider valuable, fail to maintain
sufficient capacity to meet demand for wireless access, delay the expansion of
their wireless networks and services, or fail to market their services
effectively. New technologies may offer alternatives to wireless infrastructure
systems. If any of these occurs, or if for any other reason the demand for
wireless services fails to grow, our results of operations and financial
condition would be adversely affected.

OUR BACKLOG MAY NOT RESULT IN SALES, AND SIGNIFICANT CUSTOMER CANCELLATIONS,
DELAYS OR REDUCTIONS OF ORDERS COULD CAUSE OUR REVENUE AND PROFITABILITY TO
DECLINE OR FLUCTUATE.

Our backlog represents orders for products and services due to be provided
within the next twelve months. As of December 31, 2001, our backlog was $123.4
million. Backlog is not necessarily indicative of future sales as our customers
may cancel or defer orders, often without penalty. Nevertheless, we make a
number of management decisions based on our backlog, including our purchase of
materials, hiring of personnel and other matters that may increase our
production capabilities and costs. Cancellations, delays or reductions of orders
could cause us to hold excess inventory, which could reduce our profitability
and restrict our ability to fund our operations. If customers cancel or delay
product shipments, we may incur unanticipated reductions or delays in our
revenue, adversely affecting our results of operations and financial condition.

FAILURE TO DEVELOP FUTURE BUSINESS OPPORTUNITIES MAY HAVE AN ADVERSE EFFECT ON
OUR GROWTH POTENTIAL.

We are pursuing a number of new business opportunities, including, for
example, emerging markets for our 3G and E 911 products and services. Our
ability to deploy and deliver these new products and services relies, in many
instances, on unproven technology. We may not be able to successfully capitalize
on these new business opportunities by effectively developing, refining and
delivering new products and services to the market. In addition, the formation
and ultimate success of these new markets, including the markets for our 3G and
E 911 products, will require carriers and original equipment manufacturers to
expend substantial capital on new systems and infrastructure. The availability
and cost of capital to our carrier and original equipment manufacturer customers
are, therefore, critical to the establishment and success of these new markets.
There can be no assurance that the capital necessary to build out new systems
and infrastructure will be available to our carrier or original equipment
manufacturer customers on a timely basis, or at all. These, and other
impediments to, or delays in, the development of these new markets would
negatively impact our future business opportunities and future sales.

With respect to E 911, changes or delays in the FCC's regulations could
have an adverse effect on our future sales. Most carriers have sought or are
seeking delays in and/or waivers for the FCC's implementation requirements and,
in a number of cases, the FCC has granted waivers to carriers extending the
implementation requirements. If the FCC grants additional waivers that have the
effect of delaying additional E 911 geolocation implementation deadlines, or
does not act at all, our ability to generate future sales from our E 911
geolocation products may be delayed or otherwise adversely affected. In
addition, because the E 911 implementation deadlines are, in part, dependent on
the carriers' receipt of requests

from local public safety answering points, or PSAPs, such as local police or
fire departments, future sales of our E 911 geolocation products may be delayed
or otherwise adversely affected if these local PSAPs delay or fail to make such
requests. Local PSAPs not inclined to implement, or to spend the required
capital to implement, E 911 capabilities on their own systems may delay or fail
to make E 911 implementation requests to carriers.

In addition, if most carriers elect to comply with the FCC regulations by
incorporating E 911 solutions that do not utilize our products, such as
solutions based on changes in handsets, we may fail to generate significant
sales or any sales from our E 911 initiative. Most carriers that originally
elected a network E 911 solution have, in connection with their waiver requests,
asked the FCC to permit them to implement a handset solution or other
alternative solution instead. Although we have entered into contracts with AT&T
Wireless and Verizon Wireless for the purchase of our network-based GEOMETRIX
products, these contracts are requirements contracts under which we provide the
carriers the equipment and services capable of meeting FCC requirements to the
extent those carriers elect to satisfy those requirements using a network-based
solution. If these carriers elect to satisfy their requirements using solutions
other than network-based solutions, we will have limited revenues from those
contracts. For example, under our contract with AT&T Wireless, a minimum
purchase commitment is applicable through the end of 2002, but not thereafter.

We cannot guarantee when or whether these new products or services will be
widely introduced or fully implemented, that they will be successful when they
are introduced or that customers will purchase the products or services offered.
If these products or services are not successful or the costs associated with
implementation and completion of the rollout of these products or services
materially exceed those currently estimated by us, our results of operations and
financial condition would be adversely affected.

WE COULD INCUR SUBSTANTIAL COSTS DEFENDING OUR INTELLECTUAL PROPERTY FROM
INFRINGEMENT OR A CLAIM OF INFRINGEMENT.

Our success depends in part on our proprietary technology. We rely on a
combination of patents, copyrights, trademarks and trade secrets,
confidentiality provisions and licensing arrangements to establish and protect
our proprietary rights. We may be required to spend significant resources to
monitor and enforce our intellectual property rights. We may not be able to
detect infringement and we, therefore, may lose our competitive position in the
market. Intellectual property rights also may be unavailable or limited in some
foreign countries. The unauthorized use of our technology by competitors could
have a material adverse effect on our ability to sell our products in some
markets.

We have been in the past, are currently and may be in the future a party to
litigation to protect our intellectual property or as a result of an alleged
infringement of others' intellectual property. This litigation could subject us
to significant liability for damages and could cause our proprietary rights to
be invalidated. We cannot assure you that we will prevail in these matters.
Litigation, regardless of the merits of the claim or outcome, would likely be
time-consuming and expensive to resolve and would divert management time and
attention. Any potential intellectual property litigation could also force us to
do one or more of the following:

- stop using the challenged intellectual property and refrain from selling
our products or services that incorporate it;

- obtain a license to use the challenged intellectual property or to sell
products or services that incorporate it, which license may increase our
costs or not be available on reasonable terms, or at all; or

- redesign those products or services that are based on or incorporate the
challenged intellectual property.

If we are forced to take any of the foregoing actions, we may be unable to
manufacture and sell our products, which would harm our business and adversely
affect our financial condition and results of operations.

On December 11, 2001, a lawsuit was filed against us in the United States
District Court for the District of Delaware by a competitor, TruePosition, Inc.,
and its subsidiary, KSI, Inc. The plaintiffs allege that we, through our Grayson
Wireless Division, have infringed three patents in connection with our GEOMETRIX
wireless geolocation business. The plaintiffs seek injunctive relief,
compensatory and treble damages and attorneys' fees. In our answer filed on
January 18, 2002, we have denied the plaintiffs' allegations and have asserted a
counterclaim against the plaintiffs of infringement of one of our patents. We
believe that we have meritorious defenses against the claims asserted by the
plaintiffs, and intend to vigorously defend the lawsuit. However, we cannot
assure you that we will ultimately prevail in this action. Whether we ultimately
win or lose, litigation could be time-consuming and costly and injure our
reputation. If the plaintiffs prevail in this action, we may be required to
negotiate royalty or license agreements with respect to the patents at issue,
and may not be able to enter into such agreements on acceptable terms. Any
limitation on our ability to provide a service or product could cause us to lose
revenue-generating opportunities and require us to incur additional expenses. We
may also be required to indemnify our customers for any expenses or liabilities
resulting from the claimed infringements. These potential costs and expenses, as
well as the need to pay any damages awarded in favor of the plaintiffs, could
adversely affect our results of operations and financial condition.

WE HAVE A DEFERRED TAX ASSET WHICH MAY NOT BE REALIZABLE.

Through December 31, 2001, we have recorded a net deferred tax asset
pertaining to the recognition of net operating loss carryforwards, net
deductible temporary differences and tax credits in the amount of $41.8 million,
up from $32.6 million at December 31, 2000, primarily due to an increase in the
net operating loss carryforwards in the U.S. caused by the tax effects of a U.S.
loss of approximately $21.2 million and tax credits in 2001. These taxable
losses generally may be carried forward for periods of up to 20 years and expire
in the years between 2011 and 2021. We have not provided a valuation allowance
relating to this asset as we believe it is more likely than not that we will
realize the value of this asset. This determination is based primarily on our
expectation that future U.S. operations will be sufficiently profitable
(notwithstanding recent losses) to utilize the operating loss carryforwards
before they expire, and various tax, business and other planning strategies
available to us. We cannot assure you that we will realize this asset or that a
future valuation allowance will not be required. The failure to utilize this
asset would adversely affect our results of operations and financial condition.

WE HAVE A SUBSTANTIAL AMOUNT OF INDEBTEDNESS, WHICH COULD ADVERSELY IMPACT OUR
BUSINESS.

At December 31, 2001, we had approximately $152.8 million of debt,
including our senior term debt, our outstanding industrial revenue bonds and
debt outstanding under our revolving credit facility. Those agreements each
limit, but do not prohibit, the incurrence of additional indebtedness by us and
our subsidiaries. We anticipate that we and our subsidiaries may incur
substantial additional indebtedness in the future in connection with our
business.

The level of our and our subsidiaries' indebtedness could have important
consequences to our investors including the following: (i) a substantial portion
of our cash flow from operations, if any, must be dedicated to the payment of
principal and interest on our indebtedness and other obligations, and will not
be available for use in our business; (ii) the level of indebtedness and related
cash debt service needs could limit our flexibility in planning for, or reacting
to, changes in our business; (iii) we expect that we will be more highly
leveraged than some of our competitors, which may place us at a competitive
disadvantage; and (iv) our high degree of indebtedness and related cash debt
service needs will make us more vulnerable in the event of a downturn in our
business.

WE MAY NOT BE ABLE TO MEET CERTAIN FINANCIAL COVENANTS IN THE INSTRUMENTS
GOVERNING OUR INDEBTEDNESS.

Our ability to meet the financial covenants relating to our indebtedness
will depend, among other factors, on our financial condition, the restrictions
contained in the instruments governing our indebtedness then outstanding and
other factors beyond our control, including market conditions. We recently
entered into an amendment to our revolving credit facility, dated as of December
31, 2001, that modified the

financial covenants contained therein to levels we believe could be achieved
under current market conditions. The amendments permit us to maintain a higher
leverage ratio, set lower benchmarks for earnings before interest, income taxes,
depreciation and amortization, and establish lower minimum fixed charge coverage
ratios over several time periods through mid- to late 2003. We also agreed to
cause some of our domestic subsidiaries to guarantee our obligations under our
revolving credit facility, to pledge some of the stock of our foreign
subsidiaries, and to place a mortgage on certain real estate owned by us. We
entered into the amendment because of concerns regarding our ability to meet the
financial covenants contained in our revolving credit facility. Despite these
amendments, we cannot assure you that we will continue to meet the financial
covenants contained in our revolving credit facility or in the other instruments
governing our indebtedness, which, among other things, will require that we
improve our earnings above the levels we have recently been able to achieve. If
we are unable to meet our obligations under the instruments governing our
indebtedness, our lenders may be entitled to exercise remedies that could be
disruptive to or have an adverse effect on our operations, such as the sale of
valuable assets that secure our indebtedness.

WE DEPEND IN LARGE PART ON ORIGINAL EQUIPMENT MANUFACTURERS TO OUTSOURCE THEIR
NEEDS FOR PRODUCTS THAT WE PRODUCE, AND WE ARE VULNERABLE IF THEY SHIFT TOWARDS
DEVELOPING AND RELYING ON THEIR IN-HOUSE CAPABILITIES.

Our future success depends largely upon the extent to which original
equipment manufacturers elect to purchase components and subsystems from outside
sources such as us. Original equipment manufacturers could develop greater
internal capabilities and decide to manufacture these products in-house, rather
than outsourcing them, which would harm our business and adversely affect our
results of operations and financial condition. Currently, a few original
equipment manufacturers utilize their captive manufacturing operations to
produce some of their own base station components and subsystems, reducing the
need to outsource such equipment needs.

THE MARKETS FOR OUR PRODUCTS ARE EXPERIENCING RAPID CHANGES IN TECHNOLOGY.

We operate in markets characterized by rapidly changing technology and
evolving customer specifications and industry standards. New products may
quickly render an existing product obsolete and unmarketable. Our growth and
future results of operations depend in part upon our ability to enhance existing
products and introduce newly developed products on a timely basis that conform
to prevailing and evolving industry standards, meet or exceed technological
advances in the marketplace, meet changing customer specifications, achieve
market acceptance and respond to our competitors' products.

The process of developing such new products can be technologically
challenging and requires the accurate anticipation of technological and market
trends. We cannot assure you that we will be able to successfully introduce new
products or do so on a timely basis. If we fail to develop new products that are
appealing to our customers or fail to develop products on time and within
budgeted amounts, we may be unable to recover our significant research and
development costs, which would harm our business and adversely affect our
results of operations and financial condition. We have in the past discontinued
product development efforts for products that we were unable to successfully
develop or introduce or that otherwise failed to gain market acceptance and, in
turn, failed to recover our research and development costs.

IF WE CANNOT DELIVER QUALITY PRODUCTS IN A PROFITABLE AND TIMELY MANNER, OUR
BUSINESS COULD BE HARMED AND OUR SALES AND PROFIT MARGINS MAY DECREASE.

Our ability to generate future sales depends upon our ability to
manufacture and supply products that meet defined specifications on a timely
basis. If we incur higher costs than anticipated when we price our products, our
gross margins on these products will decrease and may not be as profitable as
expected. In addition, if we are unable to deliver our products as required by
the terms of our product sales contracts, our customers may cancel these
contracts. For example, if we cannot meet FCC specifications for performance of
network-based E 911 geolocation solutions, AT&T Wireless may be able to
terminate its contract with us. In that event, we might not recover costs that
we incurred for research and development,

sales and marketing, production and otherwise, and we may incur additional costs
as contractual penalties. If we fail to meet a delivery deadline, or a customer
determines that the products we deliver do not meet the agreed-upon
specifications, we may have to reduce the price we can charge for our products,
or we may be liable to pay damages to the customer. Failing to successfully
manage these risks could adversely affect our results of operations and
financial condition.

OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION MAY CONTINUE TO BE ADVERSELY
AFFECTED BY ADVERSE FOREIGN CURRENCY FLUCTUATIONS.

We derive a significant portion of our revenues from foreign operations,
primarily in Europe. In recent periods, the strong U.S. dollar relative to the
Euro has negatively impacted reported sales and pretax income of our European
operations, and the translated value on the balance sheet of our European
subsidiaries. These effects could continue or worsen. In addition, as we expand
our operations geographically, our results of operations and financial condition
may be adversely affected by fluctuations in other currencies. We have not
recently engaged in significant hedging activities relating to our non-U.S.
dollar operations, and we could suffer future losses as a result of changes in
currency exchange rates. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Quantitative and Qualitative Disclosures
about Market Risk."

WE OPERATE A SIGNIFICANT PORTION OF OUR BUSINESS IN, AND PLAN TO EXPAND FURTHER
INTO, MARKETS OUTSIDE THE U.S., WHICH SUBJECTS US TO ADDITIONAL BUSINESS RISKS.

A significant portion of our business has been and will continue to be
conducted in international markets. During 2001, sales generated from our
customers located outside the U.S. accounted for 60.8% of our total sales.
Conducting business internationally subjects us to a number of additional risks
and uncertainties, including:

- unexpected delays or changes in regulatory requirements;

- difficulties and costs related to complying with a wide variety of
complex foreign laws and treaties;

- delays and expenses associated with tariffs and other trade barriers;

- restrictions on and impediments to repatriation of our funds and our
customers' ability to make payments to us;

- political and economic instability;

- difficulties and costs associated with staffing and managing
international operations and implementing, maintaining and improving
financial controls;

- greater dependence upon independent sales representatives and other
indirect resellers who may not be as effective and reliable as our
employees;

- inadequate or uncertain protection of intellectual property in foreign
countries;

- increased difficulty in collecting accounts receivable; and

- adverse tax consequences.

Some of these factors may restrict our ability to continue expanding into
international markets or adversely affect our results of operations.

OUR LENGTHY AND VARIABLE SALES AND DEVELOPMENT CYCLE MAKES IT DIFFICULT FOR US
TO PREDICT IF AND WHEN A SALE CAN BE MADE AND COULD LEAD TO OPERATING
DIFFICULTIES AND CASH FLOW PROBLEMS.

Our sales and development cycle, which is the period from the generation of
a sales lead or new product idea through the development of the product and the
recording of sales, could be as long as several years, making it very difficult
to forecast sales and results of operations. Our inability to accurately predict
the timing and magnitude of sales of our products could affect our ability to
meet our customers'
18

product delivery requirements, or cause our results of operations to suffer if
we incur expenses in a particular period that do not translate into sales during
that period, or at all. In addition, these failures would make it difficult to
plan future capital expenditure needs and could cause us to fail to meet our
cash flow requirements. These problems could adversely affect our results of
operations and financial condition.

OUR DEPENDENCE ON SUPPLIERS AND CONTRACT MANUFACTURERS TO DELIVER KEY COMPONENTS
AND PROVIDE CRITICAL MANUFACTURING SERVICES MAY AFFECT OUR ABILITY TO DELIVER
PRODUCTS TO OUR CUSTOMERS IN A TIMELY MANNER, WHICH MAY RESULT IN LOST SALES AND
DAMAGE TO OUR REPUTATION.

We rely on outside suppliers and contract manufacturers that, in some
instances, are single or limited sources for key components or services that we
need to produce our products. If we lose one or more of these sources, we could
be delayed in, or prevented from, delivering our products to our customers and
our customer relations and business could suffer. If manufacturing or supply
delays or shortages of certain key components or services occur, we could
experience an interruption in production until we are able to locate alternative
sources.

Other risks relating to our reliance on contract manufacturers and on
limited suppliers include reduced control over production costs, delivery
schedules and quality of materials. The inability to obtain timely deliveries of
acceptable quality materials, or any other circumstances that would require us
to seek alternative contract manufacturers or suppliers, could adversely affect
our ability to deliver products to our customers. In addition, if our contract
manufacturers or suppliers increase prices, we may suffer losses if we are
unable to recover such additional costs from our customers.

OUR QUARTERLY RESULTS OF OPERATIONS HAVE FLUCTUATED SIGNIFICANTLY IN THE PAST
AND WE EXPECT THESE FLUCTUATIONS TO CONTINUE. IF OUR RESULTS ARE WORSE THAN
EXPECTED, OUR STOCK PRICE COULD SUFFER.

Our quarterly sales and results of operations have varied and are likely to
continue to vary significantly for various reasons, including: (i) the timing,
cancellation or rescheduling of customer orders or shipments; (ii) changing
customer estimates for product requirements; (iii) the pricing and mix of
products sold; (iv) the introduction of new products; (v) our ability to obtain
manufacturing services and components from our contract manufacturers and raw
materials from our suppliers; and (vi) variations in manufacturing efficiencies.
In addition, we expect our results will fluctuate because of the seasonality of
sales and shipments, with less activity in the winter months due to the impact
of inclement weather conditions on infrastructure build out and product
installations. As a result, our quarterly results of operations may be below the
expectations of market analysts and investors. If this occurs, our stock price
could suffer.

IF WE LOSE KEY PERSONNEL WE MAY NOT BE SUCCESSFUL.

Our success depends upon the continuing contributions of our key
management, research, product development, sales and marketing and manufacturing
personnel, many of whom would be difficult to replace. We have not entered into
employment agreements with many of our key officers and managers.

INTENSE COMPETITION FOR EXPERIENCED ENGINEERS AND OTHER TECHNICAL PERSONNEL MAY
AFFECT OUR ABILITY TO SUSTAIN OUR GROWTH EXPECTATIONS.

We depend on, and must attract and retain, competent personnel in all areas
of our business, especially our qualified engineers and other technically
proficient personnel. We believe that our engineers and other technical
personnel are in high demand. We may not be able to hire and retain personnel at
compensation levels consistent with our existing structure. If we are unable to
retain a sufficient number of engineering and technical personnel, we may be
unable to support the growth of our business and, as a result, our results of
operations may suffer.

WE MAY ENCOUNTER DIFFICULTIES IN ACQUIRING AND EFFECTIVELY INTEGRATING
BUSINESSES.

As part of our business strategy, we will continue to identify and evaluate
acquisition opportunities that we believe would complement our business.
Historically, we have acquired a number of businesses integral to our success.
The process of identifying and completing potential acquisitions is, however,
very challenging and competitive. We cannot assure you that we will be
successful in consummating our future acquisition efforts.

Acquisitions we attempt to make or are successful in making will be
accompanied by the risks commonly encountered in acquisitions of businesses,
which include, among other things:

- the expenditure of time, attention and funds on potential acquisitions
that are not consummated;

- higher than anticipated acquisition costs and expenses;

- the difficulty and expense of assimilating the operations and personnel
of the businesses, especially if the acquired operations are
geographically distant;

- the potential disruption of our ongoing business and diversion of
management time and attention;

- a failure to maximize our financial and strategic position by the
successful incorporation of acquired technology;

- difficulties in adopting and maintaining uniform standards, controls,
procedures and policies;

- the loss of key employees and customers as a result of changes in
management;

- the potential exposure to unknown liabilities of acquired companies; and

- the possible dilution to our stockholders.

We recently acquired substantially all of the assets of Bartley R.F.
Systems, Inc. We could incur costs greater than anticipated and have difficulty
assimilating or retaining Bartley R.F. Systems, Inc.'s, or any other acquired
companies', personnel or integrating their operations or services into our
organization, which could disrupt our ongoing business, distract our management
and employees and reduce or eliminate the financial or strategic benefits that
we sought to achieve through the acquisition and, therefore, threaten our future
growth.

We may not be successful in overcoming these risks or any other problems
encountered in connection with any of our acquisitions. We may make a strategic
acquisition with anticipated long-term benefits even though the transaction may
adversely affect our short-term profitability. The completion of this type of
acquisition in the future would negatively affect our short-term profitability
and may cause a decline in our stock price.

OUR PRODUCTS ARE DEPLOYED IN COMPLEX NETWORKS AND MAY HAVE ERRORS OR DEFECTS
THAT WE FIND ONLY AFTER DEPLOYMENT.

Our products are highly complex, designed to be deployed in complicated
communications networks and may contain undetected defects, errors or failures.
Although our products are generally tested during manufacturing, prior to
deployment, they can only be fully tested when deployed in commercial networks.
Consequently, our customers may discover errors after the products have been
deployed. The occurrence of any defects, errors or failures could result in
installation delays, product returns, termination of contracts with our
customers, diversion of our resources, increased service and warranty costs,
legal actions by our customers, increased insurance costs and other losses to us
or to our customers or end-users. Any of these occurrences could also result in
the loss of or delay in market acceptance of our products and could damage our
reputation. In addition, if our products are determined to be defective, or
malfunction and cause loss of service or property damage and this malfunction is
determined to be caused by our products, we could be held liable for the
resulting damages in a lawsuit. Any of these occurrences could adversely affect
our results of operations and financial condition.

IF WE FAIL TO MANAGE OUR GROWTH EFFECTIVELY, OUR BUSINESS COULD BE HARMED.

The challenges associated with managing our growth may place a strain on
our planning and management capabilities. To manage our expected growth of
operations and personnel, we will need to:

- manage new customer relationships, manufacturing facilities and
operations in new countries;

- improve financial and operational controls, as well as our reporting
systems and procedures;

- upgrade existing or install new management information systems; and

- hire, train, motivate and manage our sales and marketing, engineering,
technical, manufacturing, finance and customer service employees.

FOREIGN AND DOMESTIC FEDERAL, STATE AND LOCAL COMMUNICATIONS LEGISLATION AND
REGULATION MAY NEGATIVELY IMPACT OUR BUSINESS AND GROWTH.

Some of our products are regulated domestically by the FCC and
internationally by other government agencies, or incorporated into wireless
communications systems that are similarly regulated. Regulatory changes,
including changes in the allocation of available frequency spectrum, changes in
planning and zoning approvals for cell site construction, changes in regulations
that govern radiation emissions from wireless communications systems, or changes
in regulations pertaining to the accuracy of E 911 network-based geolocation
solutions could negatively affect our business by restricting development and
deployment efforts by our customers, making our current products obsolete or
increasing the opportunity for additional competition. In addition, the
increasing demand for wireless communications has exerted pressure on regulatory
bodies worldwide to adopt new standards for these products. It is difficult to
predict future legislation and regulation. Our sales would be adversely affected
if our products fail to comply with applicable domestic and international
regulations.

Delays inherent in the governmental licensing and approval process have in
the past caused, and may in the future cause, cancellation, postponement or
rescheduling of the installation of communications systems by our customers.
These delays may have a negative impact on the sale of our products to these
customers.

The impact of regulation on some aspects of our business is uncertain. For
instance, the success of our E 911 geolocation initiative is largely dependent
on the scope and timing of the FCC's E 911 regulations, rulings, waivers and
responses to requests for waivers. Likewise, the success of our 3G products and
services is largely dependent on spectrum availability and licensing for 3G
wireless networks. The U.S. and some other major countries may not license 3G
frequencies for several years. Also, there may be changes or delays in
applicable regulations, rulings and responses to requests for waivers that could
adversely affect our E 911 and 3G opportunities.

In addition, legislation has been adopted or proposed in some state and
local legislative bodies to restrict or prohibit the use of wireless phones
while driving motor vehicles. If laws are passed prohibiting or restricting the
use of wireless phones while driving, they could have the effect of reducing
subscriber usage, which could cause an adverse effect on the demand for wireless
services and a corresponding adverse effect on our results of operations.

CONCERNS ABOUT ALLEGED HEALTH RISKS RELATING TO RADIO FREQUENCY EMISSIONS MAY
AFFECT OUR BUSINESS.

Media reports and some studies have suggested that radio frequency
emissions from wireless handsets and cell sites may be associated with various
health problems, including cancer, and may interfere with electronic medical
devices, including hearing aids and pacemakers. In addition, lawsuits have been
filed against participants in the wireless industry alleging various adverse
health consequences as a result of wireless equipment emissions. If consumers'
health concerns over radio frequency emissions increase, they may be discouraged
from using wireless handsets, and regulators may impose restrictions on the
location and operation of cell sites. These concerns could have an adverse
effect on the wireless communications industry.

These concerns have recently received increased focus, as demonstrated by
the adoption in July 2000 by the Cellular Telecommunications & Internet
Association, the leading trade group of domestic carriers, of a policy requiring
handset manufacturers to disclose emission levels. Additional studies of radio
frequency emissions are ongoing. The ultimate findings of these studies will not
be known until they are completed and made public. We cannot assure you that
government authorities will not increase regulation of wireless handsets and
cell sites as a result of these health concerns or that wireless companies will
not be held liable for costs or damages associated with these concerns.

WE ARE SUBJECT TO STRINGENT ENVIRONMENTAL REGULATION, WHICH COULD NEGATIVELY
IMPACT OUR BUSINESS.

We are subject to a variety of national, state, local and foreign laws,
rules and regulations related to the discharge and disposal of toxic, volatile
and other hazardous chemicals used in our manufacturing process. Our failure to
comply with present or future regulations could result in fines being imposed on
us, suspension of our production or a cessation of our operations. The
regulations could require us to acquire significant equipment or to incur
substantial expenses in order to comply with environmental regulations. Any past
or future failure by us to control the use of, or to restrict adequately the
discharge of, hazardous substances could subject us to future liabilities and
could cause our business, results of operations and financial condition to
suffer. In addition, under some environmental laws and regulations we could be
held financially responsible for remedial measures if our properties are
contaminated, even if we did not cause the contamination.

OUR RIGHTS PLAN AND CERTAIN PROVISIONS OF OUR CERTIFICATE OF INCORPORATION AND
BYLAWS COULD DISCOURAGE POTENTIAL ACQUISITIONS OF OUR COMPANY THAT STOCKHOLDERS
MAY CONSIDER FAVORABLE.

Certain provisions of our rights plan, together with certain provisions of
our certificate of incorporation, our bylaws and Delaware law, may discourage,
delay or prevent a merger or acquisition that stockholders may consider
favorable. The existence of these provisions may adversely affect the
marketability and market price of the convertible preferred stock or our common
stock.

RISKS RELATING TO THIS OFFERING

WE MAY BE RESTRICTED FROM PAYING DIVIDENDS ON THE CONVERTIBLE PREFERRED STOCK
OR, IN THE EVENT OUR BOARD DOES NOT DECLARE OR WE DO NOT PAY A DIVIDEND, WE MAY
BE RESTRICTED FROM INCREASING THE CONVERSION RATIO.

The terms of the instruments governing our indebtedness could restrict our
ability to pay cash dividends on the convertible preferred stock. Our ability to
pay cash dividends on our convertible preferred stock will depend on our meeting
certain financial criteria. See "Description of Convertible Preferred
Stock -- Dividends" and "Description of Certain Indebtedness and Capital Stock"
for a more detailed discussion of the provisions that currently restrict our
ability to pay cash dividends on our convertible preferred stock. Even if the
terms of the instruments governing our indebtedness and convertible preferred
stock allow us to pay dividends on the convertible preferred stock, under
Delaware law, we are permitted to pay dividends only from our "surplus," which
is the excess of our total assets over the sum of our liabilities plus the par
value of our outstanding capital stock, or if we have no surplus, out of our net
profits for the year in which a dividend is declared or for the immediately
preceding fiscal year. We cannot assure you that we will have any surplus or net
profits so that we will be able to pay dividends on the convertible preferred
stock. In addition, if an automatic increase in the conversion ratio in respect
of an undeclared or unpaid dividend is deemed to be a constructive dividend for
purposes of Delaware law, we may be able to automatically increase the
conversion ratio in respect of an undeclared or unpaid dividend only at such
times as the requirements of Delaware law with respect to the declaration of
dividends, discussed above, have been satisfied.

OUR ABILITY TO ISSUE PARITY PREFERRED STOCK IN THE FUTURE COULD ADVERSELY AFFECT
THE RIGHTS OF HOLDERS OF CONVERTIBLE PREFERRED STOCK AND OUR COMMON STOCK.

Our second restated certificate of incorporation authorizes us to issue up
to 3,000,000 shares of preferred stock in one or more series on terms that may
be determined at the time of issuance by our board of directors. Accordingly, we
may authorize, increase the authorized amount of or issue any shares of any
series of preferred stock that would rank senior to the convertible preferred
stock as to dividend rights or rights upon our liquidation, winding-up or
dissolution, although we would need the affirmative vote or consent of the
holders of at least 66 2/3% of the outstanding shares of convertible preferred
stock to do so. We would not need that vote or consent to authorize, increase
the authorized amount of or issue any series of preferred stock that ranks on a
parity with or junior to the convertible preferred stock as to such rights. In
addition, the terms of the convertible preferred stock provide that we may
declare and pay stock dividends on parity preferred stock and junior classes of
stock even if dividends are not declared and paid on the convertible preferred
stock. Our future issuance of preferred stock could therefore effectively
diminish or supersede dividends on and the liquidation preference of the
convertible preferred stock and adversely affect our common stock.

THE SALE OF A SUBSTANTIAL NUMBER OF SHARES OF OUR COMMON STOCK IN THE PUBLIC
MARKET COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK.

Substantially all of our currently outstanding shares of common stock have
been registered for sale under the Securities Act or are eligible for sale under
an exemption from the registration requirements. In addition, we recently
registered for resale the shares of common stock that we issued in connection
with the acquisition of substantially all of the assets of Bartley R.F. Systems,
Inc. Further, as of December 31, 2001, there were outstanding options and
warrants to purchase approximately 3,235,296 shares of our common stock. More
options will be granted in the future under our employee benefit plans.
Additionally, we may in the future issue warrants exercisable for our common
stock or additional series of preferred stock that is convertible into or
exchangeable for our common stock. The shares of common stock issuable upon
conversion of or that may be issued as dividends on the convertible preferred
stock will also be freely tradable. Sales or the expectation of sales of a
substantial number of shares of our common stock in the public market, or the
perception that such sales could occur, could adversely affect the prevailing
market price of our common stock.

YOUR RIGHT TO RECEIVE LIQUIDATION AND DIVIDEND PAYMENTS ON THE CONVERTIBLE
PREFERRED STOCK IS JUNIOR TO OUR EXISTING AND FUTURE SENIOR INDEBTEDNESS AND TO
ALL OF THE LIABILITIES OF OUR SUBSIDIARIES AND ANY SENIOR STOCK WE MAY ISSUE IN
THE FUTURE.

With respect to dividend rights or rights upon our liquidation, winding-up
or dissolution, the convertible preferred stock will rank junior to all present
and future indebtedness and other payment obligations of ours and of our
subsidiaries and all future Senior Stock (as defined under "Description of the
Convertible Preferred Stock -- Ranking; Amendments"), on parity with all future
capital stock designated as on parity, and senior to our Series C Junior
Participating Preferred Stock and all classes of our common stock. Further, the
claims of creditors of our subsidiaries will be effectively senior to all
payments, including liquidation and dividend payments on the convertible
preferred stock. As of December 31, 2001, after giving effect to the repayment
of approximately $ from the net proceeds of this offering, we would
have had approximately $ million of indebtedness and other liabilities
(including capitalized lease obligations and trade payables of our
subsidiaries), all of which would have been senior in right of payment to the
convertible preferred stock. In the event of our bankruptcy, liquidation or
reorganization, our assets will be available to pay obligations on the
convertible preferred stock only after all of our indebtedness and all Senior
Stock, if any, has been paid, and there may not be sufficient assets remaining
to pay amounts due on any or all of the convertible preferred stock then
outstanding and any preferred stock ranking on parity with the convertible
preferred stock. See "Description of the Convertible Preferred Stock -- Ranking;
Amendments."

A SIGNIFICANT PORTION OF OUR ASSETS IS THE STOCK OF OUR SUBSIDIARIES AND WE ARE
PARTIALLY DEPENDENT ON OUR SUBSIDIARIES TO GENERATE THE FUNDS NEEDED TO OPERATE
OUR BUSINESS.

A significant portion of our assets consists of the stock of our
subsidiaries. We may have to rely upon dividends and other payments from our
subsidiaries to generate the funds necessary to make dividend payments, if any,
on the convertible preferred stock and to redeem the convertible preferred
stock. Our subsidiaries, however, are legally distinct from us and have no
obligation to pay amounts due pursuant to the convertible preferred stock. The
ability of our subsidiaries to make dividend and other payments to us is subject
to, among other things, the availability of funds, the terms of our
subsidiaries' indebtedness and applicable state or foreign laws.

WE CANNOT ASSURE YOU THAT AN ACTIVE TRADING MARKET WILL DEVELOP FOR THE
CONVERTIBLE PREFERRED STOCK.

There has been no market for the convertible preferred stock prior to this
offering and we have not and do not intend to apply for the listing of the
convertible preferred stock on any securities exchange. We have been informed by
the underwriters that one or more of them intend to make a market in the
convertible preferred stock after this offering is completed. They are not,
however, obligated to do so and may cease their market-making activities at any
time. In addition, the liquidity of any trading market in the convertible
preferred stock, and the market price quoted for the convertible preferred
stock, may be adversely affected by changes in the overall market for
convertible securities and by changes in our financial performance or prospects,
changes in the price of our common stock or in the prospects for companies in
our industry generally. As a result, we cannot assure you that an active trading
market will develop for the convertible preferred stock, or, if one develops,
that the convertible preferred stock will trade at prices higher than the
initial offering price.

OUR COMMON STOCK PRICE MAY BE VOLATILE, AND WE CANNOT ASSURE YOU THAT OUR STOCK
PRICE WILL NOT DECLINE.

The market price of our common stock has been and may in the future be
subject to significant fluctuations as a result of many factors, some of which
are beyond our control. Among the factors that have in the past and could in the
future affect our stock price are:

- quarterly variations in our results of operations;

- changes in sales or earnings estimates or publication of research reports
by analysts;

- speculation in the press or investment community about our business or
the wireless communications industry generally;

- changes in market valuations of similar companies and stock market price
and volume fluctuations generally;

- strategic actions by us or our competitors such as acquisitions or
restructurings;

- regulatory developments;

- additions or departures of key personnel;

- general market conditions; and

- domestic and international economic, market and currency factors
unrelated to our performance.

The stock markets in general, and the markets for technology and
technology-related stocks in particular, have experienced extreme volatility
that has sometimes been unrelated to the operating performance of particular
companies. These broad market fluctuations may adversely affect the trading
price of our common stock.

DISTRIBUTIONS ON THE CONVERTIBLE PREFERRED STOCK MAY HAVE DISADVANTAGEOUS TAX
CONSEQUENCES TO HOLDERS.

Distributions on the convertible preferred stock will be taxable for U.S.
federal income tax purposes as ordinary dividend income (and eligible for the
dividends-received deduction for certain U.S. corporate

holders) only to the extent paid out of our current or accumulated earnings and
profits as determined for federal income tax purposes and otherwise will be
treated in the manner described under "Certain United States Federal Income Tax
Considerations -- Tax Considerations for U.S. Holders of Convertible Preferred
Stock -- Dividends to Corporate Holders." However, we do not currently have
accumulated earnings and profits and cannot accurately predict at what point we
will have current or accumulated earnings and profits. Absent current or
accumulated earnings and profits, distributions on the convertible preferred
stock will constitute tax-free returns of capital to the extent of the holder's
tax basis in the convertible preferred stock and thereafter capital gain and
will not be eligible for the dividends-received deduction.

UPON MANDATORY REDEMPTION OR LIQUIDATION, YOU WILL NOT BE COMPENSATED FOR
ACCUMULATED INCREASES IN THE CONVERSION RATIO IN RESPECT OF UNDECLARED OR UNPAID
DIVIDENDS.

Upon mandatory redemption or liquidation, you will be entitled, subject to
availability of funds, to receive cash equal to the liquidation preference,
$50.00, for each share of convertible preferred stock held by you. If your
shares of convertible preferred stock have not been converted into common stock
at your election or mandatorily by us prior to the date of mandatory redemption
or liquidation, as applicable, then upon mandatory redemption or liquidation,
you will not be entitled to receive any additional amount to compensate you for
accumulated increases in the conversion ratio in respect of undeclared or unpaid
dividends through the date of mandatory redemption or liquidation.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus and the documents incorporated by reference contain
forward-looking statements. These statements relate to future events or our
future financial performance. In some cases, you can identify forward-looking
statements by terms such as "could," "future," "may," "hope," "should,"
"expect," "plan," "anticipate," "intend," "believe," "estimate," "predict,"
"potential" or "continue," the negative of these terms or other comparable
terminology. Forward-looking statements are only predictions and actual events
or results may differ materially. In evaluating the risks and uncertainties of
forward-looking statements, you should specifically consider various factors,
including the risks described in "Risk Factors" and other parts of this
prospectus and the documents incorporated by reference.

Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Except as otherwise provided by law, we
are under no duty to update any of the forward-looking statements after the date
of this prospectus to conform them to our actual results or to changes in our
operations.

USE OF PROCEEDS

The net proceeds to us from the sale of the convertible preferred stock in
this offering are estimated to be $ million, or $ if the underwriters
exercise the over-allotment option in full, after deducting underwriting
discounts and commissions and the estimated offering expenses payable by us. We
will use a portion of the net proceeds from this offering to repay a portion of
the outstanding indebtedness under our revolving credit facility. An affiliate
of one of the underwriters acts as the administrative and collateral agent and
is a lender under our revolving credit facility and will receive a portion of
the proceeds of this offering. See "Underwriting." We also may use a portion of
the net proceeds from this offering for working capital and other corporate
purposes, including capital expenditures, payment of interest or additional
indebtedness, acquisitions of businesses or assets and investments.

Approximately $67.0 million was outstanding under our revolving credit
facility, bearing interest at an average annual rate of 4.5%, as of December 31,
2001. Our revolving credit facility matures on December 31, 2003. Our revolving
credit facility provides for revolving loans of up to $105.0 million, subject to
reduction upon consummation of this offering by the lesser of $30.0 million or
60% of the net proceeds from this offering. Consequently, the $105.0 million
revolving credit facility would be reduced to approximately $ million as a
result of this offering.

PRICE RANGE OF OUR COMMON STOCK

Our common stock has been traded on the New York Stock Exchange since
September 1971 under the symbol "ALN." Our common stock is also listed on the
Pacific Exchange. The following table sets forth, for the periods indicated, the
range of high and low sales prices of our common stock as reported by Dow Jones
in a composite that includes the New York Stock Exchange and regional markets.

HIGH LOW
------ ------

YEAR ENDED DECEMBER 31, 2000:
First Quarter............................................. $19.94 $10.56
Second Quarter............................................ 20.00 12.88
Third Quarter............................................. 21.94 15.69
Fourth Quarter............................................ 24.00 14.13
YEAR ENDED DECEMBER 31, 2001:
First Quarter............................................. $21.75 $11.60
Second Quarter............................................ 15.00 10.80
Third Quarter............................................. 14.80 6.63
Fourth Quarter............................................ 9.64 6.85
YEAR ENDING DECEMBER 31, 2002:
First Quarter (through February 27, 2002)................. $ 9.91 $ 6.97

On February 27, 2002, the last reported sale price on the New York Stock
Exchange for our common stock was $7.19 per share. On February 27, 2002, there
were approximately 1,652 holders of record of our common stock.

DIVIDEND POLICY

Our policy is to retain earnings to provide funds for the operation and
expansion of our business. We have not declared cash dividends on our common
stock since September 1995. Dividends on the convertible preferred stock are
payable when, as and if declared, in cash, common stock or a combination
thereof. If our board of directors does not declare a dividend, declares a
partial dividend or we fail to pay a dividend declared by our board for any
dividend period, you will not be entitled to receive the undeclared or unpaid
dividend amount and it will not accumulate, but the conversion ratio per share
of convertible preferred stock shall automatically increase on the dividend
payment date on which such undeclared or unpaid dividend amount would have been
paid by 115% of the number of shares of common stock that we would have been
required to issue as a stock dividend on each share of convertible preferred
stock to pay the undeclared or unpaid dividend amount for that dividend period
in full. This automatic increase in the conversion ratio will occur each time
our board does not declare a dividend, declares a partial dividend or we fail to
pay a dividend declared by our board for a dividend period, and such conversion
ratio increases will accumulate.

Any future determination relating to dividend policy will be made at the
discretion of our board of directors and will depend on a number of factors,
including future earnings, capital requirements, financial condition, future
prospects and other factors our board of directors may deem relevant. In
addition, our debt agreements restrict, under limited circumstances, our ability
to pay cash dividends without the bank's consent. Further, our ability to pay
cash dividends may be dependent, in part, on our subsidiaries' ability to make
cash dividends and other payments to us. See "Risk Factors -- Risks Relating to
This Offering -- We may be restricted from paying dividends on the convertible
preferred stock or, in the event our board does not declare or we do not pay a
dividend, we may be restricted from increasing the conversion ratio."

CAPITALIZATION

The following table sets forth our consolidated capitalization as of
December 31, 2001. Our capitalization is presented on an actual basis and on an
as adjusted basis. The as adjusted presentation gives effect to our receipt of
$ million of net proceeds after deducting underwriting discounts and
commissions and estimated offering expenses payable by us and the use of a
portion of such net proceeds to repay a portion of the indebtedness outstanding
under our revolving credit facility.

AS OF
DECEMBER 31, 2001
--------------------
AS
ACTUAL ADJUSTED
-------- --------
(IN THOUSANDS)

Cash and cash equivalents................................... $ 16,368 $
========
Notes payable and current maturities of long-term debt...... $ 12,318 $
--------
Long-term debt.............................................. $140,530 $
--------
Redeemable Preferred Stock:
Series D % Convertible Preferred Stock, without par
value, authorized -- shares; issued and
outstanding -- shares (as adjusted)........ $ -- $
--------
Stockholders' equity:
Common stock, par value $1.00, authorized -- 50,000
shares; issued -- 32,500, outstanding -- 30,425........ $ 32,500 $
Paid-in capital........................................... 203,548
Retained earnings......................................... 69,676
Accumulated other comprehensive loss...................... (30,671)
Less: Treasury stock -- common shares at cost -- 2,075.... (15,440)
Less: Unearned compensation............................... (1,256)
--------
Total stockholders' equity.................................. $258,357 $
--------
Total capitalization................................... $411,205 $
========

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of
operations should be read in conjunction with our consolidated financial
statements and notes thereto included elsewhere in this prospectus. The
discussion in this section contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ from those anticipated
in the forward-looking statements. In evaluating the risks and uncertainties of
forward-looking statements, you should specifically consider various factors,
including the risks described in the section captioned "Risk Factors," and those
described in other parts of this prospectus and the documents incorporated by
reference. Additional information relating to forward-looking statements is
included in the section captioned "Special Note Regarding Forward-Looking
Statements."

OVERVIEW

We design, manufacture and market wireless communications infrastructure
equipment and provide wireless engineering and consulting services for the
global wireless communications markets. Our products and services improve the
capacity, coverage and performance of wireless networks, including emerging 3G
networks. As part of our commitment to our customers' evolving needs, we have
also developed new products for E 911 geolocation and other emerging wireless
equipment markets such as next generation power amplifiers. Our products and
services serve all major wireless standards and frequencies.

We were founded in 1928 as Allen Electric & Equipment Company and have been
listed on the New York Stock Exchange since September 1971. We repositioned our
business through a series of strategic acquisitions and divestitures during the
1990s and have been known as Allen Telecom Inc. since February 1997.

Sales. Our sales are derived primarily from wireless infrastructure
equipment and engineering services provided to wireless communications original
equipment manufacturers, or OEMs, and carriers. We make the majority of our
communications equipment sales pursuant to orders received under master purchase
agreements or specific purchase contracts, and our wireless engineering services
are typically provided on the basis of time and materials or specific service
contracts. Sales are recorded at the time products are shipped or services are
performed.

We derive a significant portion of our sales from some of the world's
largest carriers and OEMs. Our top 10 customers accounted for 47.7%, 55.2% and
55.2% of total sales in 1999, 2000 and 2001, respectively. Siemens AG, our
largest customer in 2001, accounted for 10.2% of total sales in 2001. Siemens AG
was the only customer in 2001 to account for more than 10% of total sales. In
2000, Nortel Networks Corporation accounted for 15.2% of total sales and was the
only customer to account for more than 10% of sales. No individual customer
accounted for more than 10% of our total sales in 1999.

We manufacture, distribute and market our products to the following
geographic regions: Asia, Australia, Europe, Latin America and North America.
International sales constituted approximately 58.7%, 58.5% and 60.8% of total
sales in 1999, 2000 and 2001, respectively. We expect international sales as a
percentage of total sales to increase over the next several years as we benefit
from the expected build out of 3G wireless networks, primarily in Europe,
although increasing sales of geolocation products in the United States are
expected to mitigate this trend. Export sales from the U.S. are primarily to
major carriers and are typically payable in U.S. dollars. European-based sales
are to major OEMs and carriers, and are typically denominated in Euros. As a
result of our international position, we are subject to foreign currency
translation fluctuations that impact the amount of sales we report in U.S.
dollars for financial reporting purposes. Other than these translation effects,
we do not believe that such currency fluctuations have significantly impacted
our competitive position or our sales to domestic or international customers for
either our U.S. or international operations.

Our annual revenue growth in the past few years has been largely dependent
upon the overall growth rate of wireless telecommunications infrastructure
equipment spending, which includes spending by both

OEMs, principally for our base station subsystems and components product line,
and carriers for our other product lines. An independent study by the Yankee
Group in September 2001 indicates that wireless telecommunications equipment
spending will increase slightly from $99.4 billion in 2001 to $100.1 billion in
2002. Several of our OEM customers have publicly indicated that 2002 revenues
are difficult to forecast based upon industry uncertainties. However, certain
OEMs have provided guidance that suggests lower sequential revenue in the first
quarter of 2002, followed by modest sequential growth in the second half of
2002. Our carrier customers have provided limited public guidance with respect
to their 2002 capital spending, and many of them have reduced their capital
spending budgets based upon their own cash flow and profitability restraints. We
cannot be certain that our results in any particular period will be consistent
with future wireless telecommunications spending patterns of OEMs and carriers.

Our historical sales have reflected seasonal fluctuations due to the effect
of less infrastructure build out and product installations in the winter months,
primarily as a result of the impact of inclement weather conditions in the large
northern hemisphere markets of Europe and North America.

We report our sales in two segments, Wireless Communications Equipment and
Wireless Engineering and Consulting Services. Our Wireless Communications
Equipment segment consists of four product lines. The following table sets forth
our sales by segments and product lines:

YEAR ENDED DECEMBER 31,
------------------------------------------------
SALES BY SEGMENTS AND PRODUCT LINES 1999 2000 2001
----------------------------------- -------------- -------------- --------------
($ MILLIONS)

Wireless Communications Equipment:
Base Station Subsystems and Components..... $143.3 42.6% $190.9 48.6% $183.0 46.3%
Repeaters and In-Building Coverage
Products................................ 93.5 27.8% 78.8 20.1% 94.5 24.0%
Base Station and Mobile Antennas........... 76.8 22.9% 97.8 24.9% 88.2 22.4%
Geolocation Products....................... -- -- -- -- 7.8 2.0%
------ ----- ------ ----- ------ -----
Total Wireless Communications
Equipment............................. 313.6 93.3% 367.5 93.6% 373.5 94.7%
Wireless Engineering and Consulting
Services................................... 22.6 6.7% 25.1 6.4% 21.1 5.3%
------ ----- ------ ----- ------ -----
Total Sales............................. $336.2 100.0% $392.6 100.0% $394.6 100.0%
====== ===== ====== ===== ====== =====

Backlog. Backlog includes all purchase orders and contracts for products
and services with requested delivery dates within one year. Generally, purchase
orders are subject to cancellation at the request of the customer. Cancelled
orders are, in some instances, subject to cancellation or restocking charges
payable to us.

Cost of Sales. Cost of sales consists primarily of: (i) direct material
costs of production components; (ii) production salaries, wages and employee
benefits; (iii) fees paid to contract manufacturers; (iv) costs of our
manufacturing facilities, including rent, depreciation, utilities, maintenance
and insurance; and (v) indirect supervisory manufacturing salaries, wages and
employee benefits.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses generally include salaries, wages, commissions, employee
benefits, travel and entertainment, communications, third party professional
fees, bad debt expense and a portion of facility expenses related to sales and
administrative activities.

Research and Development and Product Engineering Costs. Research and
development and product engineering costs relate to our engineering and
technical operations and include salaries, wages, employee benefits, test
equipment, test labs, third party contract research, prototype expenses and
related facility expenses. Over the last three years, we have invested a
significant portion of our research and development resources in our new
initiatives, including products for emerging 3G networks, E 911 geolocation
products and next generation power amplifiers.

Other Income, Net. Other income, net principally includes non-recurring
gains and losses relating to the sale of investments.

Income Taxes. We operate our business in 19 countries and accrue and pay
income taxes in each of those countries in accordance with each country's tax
rates and rules.

Reporting Matter. In order to facilitate the timely preparation of our
financial statements on a consolidated basis, we historically included the
results of our principal European operations on a two-month delayed basis.
Effective January 1, 2001, such European operations changed their fiscal
year-end from October 31 to December 31, consistent with the balance of our
operations. The results of operations (net income of $2.4 million) for these
European operations for November and December 2000 were recorded directly to
retained earnings in the first quarter of 2001. The results of operations for
the period January 1, 2001 through December 31, 2001 were included in the 2001
reported results of operations.

RESULTS OF OPERATIONS

The following table sets forth our consolidated results of operations as a
percentage of sales for the periods shown:

YEAR ENDED DECEMBER 31,
------------------------
1999 2000 2001
------ ------ ------

Sales....................................................... 100.0% 100.0% 100.0%
Cost of sales............................................... 73.5 70.7 75.1
----- ----- -----
Gross profit.............................................. 26.5 29.3 24.9
Operating expenses:
Selling, general and administrative expenses.............. 16.3 13.8 14.4
Research and development and product engineering costs.... 8.3 6.5 6.6
Amortization of goodwill.................................. 2.1 2.0 2.0
----- ----- -----
Operating (loss) income..................................... (0.2) 7.0 1.9
Other income, net........................................... 1.0 -- --
Net interest expense........................................ 2.4 2.3 2.6
----- ----- -----
(Loss) Income before taxes and minority interests........... (1.6) 4.7 (0.7)
Benefit from (provision for) income taxes................... 0.5 (1.9) 0.3
Minority interests.......................................... (0.5) -- (0.1)
----- ----- -----
(Loss) income from continuing operations.................... (1.6)% 2.8% (0.5)%
===== ===== =====

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

Sales. Sales increased slightly to $394.6 million in 2001 from $392.6
million in 2000. As a result of the lower-valued Euro compared to the U.S.
dollar, our reported sales, when translated into U.S. dollars, were $5.3 million
lower in 2001 than they would have been had the average exchange rate remained
constant from 2000 to 2001.

Sales from our Wireless Communications Equipment segment increased $6.0
million, or 1.6%, to $373.5 million in 2001 from $367.5 million in 2000
primarily due to greater demand for repeater and in-building coverage products
and sales of geolocation products, partially offset by a decline in sales of
base station subsystems and components and base station and mobile antennas.
Sales of repeater and in-building coverage products increased 20.0% in 2001 from
2000 due primarily to increased repeater sales to European carriers. The
decrease in sales of base station subsystems and components and base station and
mobile antennas products was principally attributable to a decline in base
station deployments around the world as well as increased competition which
resulted in lower pricing to our customers.

Sales from our Wireless Engineering and Consulting Services segment
decreased $4.0 million, or 16.1%, to $21.1 million in 2001 from $25.1 million in
2000 primarily due to a decrease in demand in the U.S. for consulting services
by fixed wireless operators. Sales in the last four months of 2001 were

particularly weak, partially due to a decrease in consulting activity following
the attack of September 11, 2001.

International sales constituted approximately 58.5% and 60.8% of total
sales in 2000 and 2001, respectively. This increased percent of international
sales is attributable to the increase in sales of repeater products to European
carriers and an increase in sales of base station antennas in China.
Geographically, all regions experienced a small decrease in sales in 2001 from
2000, with the exception of Asia, which had an increase in customer sales to
China.

Backlog. Backlog increased $12.1 million, or 10.9%, to $123.4 million at
December 31, 2001 from $111.3 million at December 31, 2000. Backlog for our
Wireless Communications Equipment segment increased $15.7 million to $122.6
million at December 31, 2001 from $106.9 million at December 31, 2000
principally due to the acquisition of Bartley R.F. Systems, Inc. ("Bartley") and
a significant increase in the backlog for geolocation products. Backlog of all
other product lines declined by $41.1 million from year to year. Backlog for our
Wireless Engineering and Consulting Services segment decreased $3.5 million to
$0.9 million at December 31, 2001 from $4.4 million at December 31, 2000.

Gross Profit. Gross profit decreased $16.7 million, or 14.5%, to $98.3
million in 2001 from $114.9 million in 2000. Our gross profit margin decreased
to 24.9% in 2001 from 29.3% in 2000 principally due to higher restructuring
costs charged to cost of sales, increased price discounting, and changes in
product mix with more sales of lower margin coverage projects, microwave radio
and booster products and less sales of higher margin measurement and software
products. Restructuring charges of $1.0 million were recorded in 2001 compared
with restructuring charges of $0.1 million recorded in 2000. Excluding
restructuring charges, our gross profit margins would have been 25.2% in 2001
and 29.3% in 2000. For more information on restructuring costs please refer to
Note 12 in the Notes to Consolidated Financial Statements.

Gross profit margins for our Wireless Communications Equipment segment
decreased to 24.9% in 2001 from 28.5% in 2000 and, excluding restructuring
charges, would have been 25.2% in 2001 and 28.6% in 2000. This decline in gross
profit margin is attributable to more competitive pricing and increased sales of
lower margin products, including boosters, microwave radios and coverage
projects.

Gross profit margins for our Wireless Engineering and Consulting Services
segment decreased to 25.6% in 2001 from 39.0% in 2000 primarily due to decreased
sales of higher margin software, and decreased utilization of our engineers for
various engineering services projects.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $2.5 million, or 4.6%, to $56.8 million in
2001 from $54.3 million in 2000 primarily due to higher restructuring charges in
2001 as well as an increase in pension expense (the year 2000 had a pension
curtailment gain of $0.8 million). Excluding special charges, these expenses
would have been $55.5 million or 14.1% of sales, in 2001 and $54.4 million, or
13.9% of sales, in 2000.

Selling, general and administrative expenses for our Wireless
Communications Equipment segment increased $4.1 million, or 10.0%, in 2001 from
2000 due to higher restructuring costs and higher pension expense, as well as
higher selling expenses in our repeaters and in building coverage product line.
Special charges associated with restructuring actions were $1.3 million in 2001.
As a percentage of sales, excluding special charges, these expenses increased to
11.9% in 2001 from 11.3% in 2000.

Selling, general and administrative expenses for our Wireless Engineering
and Consulting Services segment decreased $1.0 million, or 18.5%, in 2001 from
2000. As a percentage of sales, these expenses declined to 20.7% in 2001 from
21.3% in 2000 as a result of continuing cost controls with the downturn in sales
during the year.

Research and Development and Product Engineering Costs. Research and
development and product engineering costs increased $0.7 million, or 2.5%, to
$26.1 million in 2001 from $25.4 million in 2000. As a percentage of sales,
these costs remained relatively constant in 2001 and 2000. Our research and

development and product engineering costs in 2000 and 2001 related exclusively
to our Wireless Communications Equipment segment.

Amortization of Goodwill. Goodwill amortization increased slightly to $7.9
million in 2001 from $7.8 million in 2000. See "-- Impact of New Accounting
Pronouncements" below for additional information.

Net Interest Expense. Net interest expense increased $1.2 million, or
13.4%, to $10.2 million in 2001 from $9.0 million in 2000. The increase in net
interest expense is primarily due to increased debt levels and lower interest
income offset, in part, by lower borrowing rates. The increased debt levels were
due to increased working capital needs in 2001.

Income Taxes. Income tax expense decreased by $8.6 million in 2001, to a
tax benefit of $1.1 million as compared to a tax expense of $7.5 million in
2000. The effective tax rate decreased to 39.0% in 2001 from 41.0% in 2000. The
principal reasons for the decrease are due to lower statutory rates at our
foreign subsidiaries and an increase in income in lower tax jurisdictions.

Through December 31, 2001, we have recorded a net U.S. deferred tax asset
pertaining to the recognition of net operating loss carryforwards, net
deductible temporary differences and tax credits in the amount of $41.8 million,
up from $32.6 million at December 31, 2000. The increase of $9.2 million in the
deferred tax asset in 2001 is caused by the tax effects of a U.S. loss of
approximately $21.2 million and tax credits generated in 2001. The tax losses
generally may be carried forward for up to 20 years and expire between the years
2011 and 2021. We have not provided a valuation reserve relating to this asset,
as we believe it is more likely than not that we will realize the value of this
asset. This determination is based primarily upon our expectation that future
U.S. operations will be sufficiently profitable (notwithstanding recent losses)
to utilize the operating loss carryforwards, and various tax, business and other
planning strategies available to the company. We cannot assure you that we will
be able to realize this asset or that future valuation allowances will not be
required. The failure to utilize this asset would adversely affect our results
of operations and financial position. See also "Critical Accounting Policies"
below and Note 7 of the Notes to Consolidated Financial Statements.

Minority Interests. Minority interests expense remained constant at $0.1
million in both 2001 and 2000.

Special Charges. In 2001, the company recognized a pretax restructuring
charge of approximately $2.3 million, or $.05 per basic and diluted share after
related income tax effect, with respect to the closing and consolidation of the
Company's U.S. base station subsystems and components manufacturing facility in
Nevada into the newly acquired Bartley manufacturing facility in Massachusetts.
Of the cost, approximately $1.0 million is in cost of sales and $1.3 million is
in selling, general and administrative expenses. The Company expects to incur
all but approximately $250,000 of these restructuring costs in 2002.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

Sales. Sales increased $56.4 million, or 16.8%, to $392.6 million in 2000
from $336.2 million in 1999. As a result of the lower-valued Euro compared to
the U.S. dollar, our reported sales, when translated into U.S. dollars, were
$27.1 million lower in 2000 than they would have been had the average exchange
rate remained constant from 1999 to 2000.

Sales from our Wireless Communications Equipment segment increased $53.9
million, or 17.2%, to $367.5 million in 2000 from $313.6 million in 1999
primarily due to greater demand for base station subsystems and components and
base station and mobile antennas, partially offset by a decline in sales of
repeaters and in-building coverage products. Sales of base station subsystems
and components increased 33.2% in 2000 from 1999 due primarily to increased base
station deployments around the world. Sales of base station and mobile antennas
increased 27.3% in 2000 from 1999 primarily due to increased deployments of cell
sites in the U.S. that included our base station antenna products. The decline
in sales

of repeater and in-building coverage products was principally attributable to
lower sales of certain test and measurement products and decreased repeater
sales to some European carriers.

Sales from our Wireless Engineering and Consulting Services segment
increased $2.5 million, or 11.1%, to $25.1 million in 2000 from $22.6 million in
1999 primarily due to greater demand for consulting services by fixed wireless
operators.

International sales constituted approximately 59% of total sales in both
1999 and 2000. Geographically, all regions experienced an increase in sales in
2000 from 1999, with the exception of Asia, which had a decrease in sales to
customers in China.

Backlog. Backlog increased $26.4 million, or 31.1%, to $111.3 million at
December 31, 2000 from $84.9 million at December 31, 1999. Backlog for our
Wireless Communications Equipment segment increased $23.3 million to $106.9
million at December 31, 2000 from $83.6 million at December 31, 1999. Backlog
for our Wireless Engineering and Consulting Services segment increased $3.1
million to $4.4 million at December 31, 2000 from $1.3 million at December 31,
1999.

Gross Profit. Gross profit increased $25.8 million, or 28.9%, to $114.9
million in 2000 from $89.1 million in 1999. Our gross profit margin increased to
29.3% in 2000 from 26.5% in 1999 principally due to lower restructuring charges
of $0.1 million recorded in 2000 compared to $6.1 million recorded in 1999, and
the cost benefits resulting from these restructuring actions. Excluding
restructuring charges, our gross profit margins would have increased to 29.3% in
2000 from 28.3% in 1999 primarily due to improved gross profit margins for our
Wireless Engineering and Consulting Services segment.

Gross profit margins for our Wireless Communications Equipment segment
increased to 28.5% in 2000 from 26.5% in 1999 and, excluding restructuring
charges, would have remained relatively constant at 28.6% in 2000 and at 28.5%
in 1999.

Gross profit margins for our Wireless Engineering and Consulting Services
segment increased to 39.0% in 2000 from 27.4% in 1999 primarily due to increased
sales of higher margin software, and increased utilization of our engineers for
various engineering services projects.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased $0.5 million, or 1.0%, to $54.3 million in
2000 from $54.8 million in 1999 primarily due to lower restructuring charges as
well as cost savings related to these restructuring actions, partially offset by
higher commissions and incentive compensation costs. Special charges associated
with restructuring actions were $5.9 million in 1999. Excluding special charges,
these expenses would have been $54.4 million, or 13.9% of sales, in 2000 and
$48.9 million, or 14.6% of sales, in 1999.

Selling, general and administrative expenses for our Wireless
Communications Equipment segment declined $2.4 million, or 5.5%, in 2000 from
1999 primarily due to lower restructuring charges. Special charges associated
with restructuring actions were $5.9 million in 1999. As a percentage of sales,
excluding special charges, these expenses declined to 11.3% in 2000 from 12.1%
in 1999 due to savings resulting from restructuring actions and general cost
controls as sales increased.

Selling, general and administrative expenses for our Wireless Engineering
and Consulting Services segment increased $0.2 million, or 4.0%, in 2000 from
1999. As a percentage of sales, these expenses declined to 21.3% in 2000 from
22.8% in 1999 as a result of increased sales with continuing cost controls.

Research and Development and Product Engineering Costs. Research and
development and product engineering costs decreased $2.5 million, or 9.0%, to
$25.4 million in 2000 from $27.9 million in 1999 primarily due to the
divestiture of Signal Science Inc., or SSI, in October 1999. SSI primarily
provided contract research and development services to the U.S. government.
Excluding $3.2 million of research and development costs related to SSI in 1999,
these costs increased $0.7 million, or 2.7%, in 2000 from 1999. As a percentage
of sales, these costs, excluding expenses related to SSI, remained relatively
constant at approximately 7% in 2000 and 1999. Our research and development and
product engineering costs in 1999 and 2000 related exclusively to our Wireless
Communications Equipment segment.

Amortization of Goodwill. Goodwill amortization increased $0.8 million, or
11.4%, to $7.8 million in 2000 from $7.0 million in 1999 primarily due to the
acquisition of minority interests in certain of our European subsidiaries during
2000 and 1999.

Net Interest Expense. Net interest expense increased $0.9 million, or
10.9%, to $9.0 million in 2000 from $8.1 million in 1999. This increase in net
interest expense is primarily due to increased debt levels and higher borrowing
costs. The increased debt levels were due to increased working capital needs,
higher capital expenditures, as well as acquisitions of minority interests in
certain of our European subsidiaries during 1999 and 2000, partially offset by
proceeds from the sale of investments and discontinued operations.

Income Taxes. Income tax expense increased $9.3 million to $7.5 million in
2000 from a tax benefit of $1.8 million in 1999. The effective tax rate of 41.0%
in 2000 is higher than the federal statutory rate of 35.0% primarily as a result
of goodwill amortization of $7.7 million that is not deductible for tax
purposes.

Minority Interests. Minority interests expense decreased $1.6 million to
$0.1 million in 2000 from $1.7 million in 1999 primarily due to the acquisition
of the remaining minority interests in certain of our European subsidiaries in
2000 and 1999.

Special Charges. With respect to restructuring actions which commenced in
1999, we incurred additional charges and gains in 2000, which resulted in a
$35,000 net gain, including the following: (i) a pretax charge of $1.7 million
primarily related to termination costs of employees, relocation costs, asset
write-offs, and other termination related benefits which were not accruable at
the time of the 1999 restructuring; (ii) a non-cash pretax gain of $1.2 million
with respect to a pension curtailment gain resulting from the workforce
reduction; and (iii) a gain of $0.5 million in the form of an adjustment to the
loss accrual for the disposal of a facility sold in January 2001. Of this
$35,000 net gain, a $106,000 charge was recorded in cost of sales and a gain of
$141,000 was recorded in selling, general and administrative expenses. Please
refer to Note 12 of the Notes to Consolidated Financial Statements for
additional information regarding special charges in 1999 and 2000.

Impact of New Accounting Pronouncements. In June 2001, the Financial
Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards No. 141 (SFAS No. 141), "Business Combinations". SFAS No. 141 requires
that the purchase method of accounting be used for all business combinations
initiated after June 30, 2001. As specified therein, goodwill and certain
intangible assets acquired will remain on the balance sheet and not be
amortized. On an annual basis, and when there is reason to suspect that their
values have been diminished or impaired, these assets must be tested for
impairment, with appropriate write-downs, if necessary. The Company implemented
SFAS No. 141 for acquisitions (Bartley) subsequent to June 30, 2001.

In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets". SFAS No. 142 changes the accounting for goodwill from an amortization
method to an impairment-only approach. Amortization of goodwill, including
goodwill recorded in past business combinations, will cease upon adoption of
this statement. We are required to implement SFAS No. 142 on January 1, 2002 and
have not determined, in all cases, the impact that this statement will have on
our consolidated financial position or results of operations. Earnings per
common share for the periods ending December 31, 1999, 2000 and 2001 would have
increased by approximately $.26 per share in 1999 and $.28 per share in 2000 and
2001 as a result of excluding the amortization of goodwill, which will be
eliminated in 2002 when the new Standard goes into effect.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations", which addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and
associated asset retirement costs. The new rules apply to legal obligations
associated with the retirement of long-lived assets that result from the
acquisition, construction, development and (or) normal operation of a long-lived
asset. SFAS 143 is effective at the beginning January 1, 2003. We believe the
adoption of SFAS 143 will not, at this time, have a material impact on our
consolidated financial position or results of operations.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". SFAS No. 144 supersedes SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," and the accounting and reporting provisions of
Accounting Principles Board Opinion No. 30, "Reporting the Results of Operations
- Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions", for
the disposal of a segment of a business (as previously defined in that opinion).
SFAS No. 144 requires that one accounting model be used for long-lived assets to
be disposed of by sale, whether previously held and used or newly acquired, and
broadens the presentation of discontinued operations to include more disposal
transactions than were included under the previous standards. We will adopt SFAS
No. 144 on January 1, 2002, as required; however, adoption of the statement is
not expected to have a material impact on our consolidated financial position or
results of operations, if any, at this time.

Critical Accounting Policies. We believe there are three important
accounting policies which could significantly impact our results of operation
and financial position in the future. The first pertains to the recognition of
the deferred tax asset with respect to net operating loss carryforwards in the
United States, the second relates to our accounting for slow moving and obsolete
inventory, and the third relates to revenue recognition.

At December 31, 2001, we had a net operating loss carryforward in the U.S.
of approximately $94.4 million (see Note 7 of the Notes to Consolidated
Financial Statements) and recorded a deferred tax asset with respect to such net
operating loss carryforward, together with net deductible temporary differences
and tax credits, in the total amount of $41.8 million. This deferred tax asset
increased $9.2 million from $32.6 million at December 31, 2000, primarily due to
an increase in the net operating loss carryforward in the United States caused
by the tax effects of a U.S. loss of approximately $21.2 million and tax credits
in 2001. We have not recorded a valuation reserve with respect to this deferred
tax asset because we believe the eventual realization of the asset is more
likely than not. This determination is based primarily on our expectation that
future U.S. operations will be sufficiently profitable (notwithstanding recent
losses) to utilize the operating loss carryforwards before they expire, and
various tax, business and other planning strategies available to us. It is
possible that operating results could continue to generate losses in the U.S. if
sales do not improve over current levels, and it is possible that the various
tax planning strategies available to us will be insufficient to fully utilize
the net operating loss carryforward. If that were the case, the Company would
record a valuation reserve relating to the deferred tax asset.

We have $17.0 million of reserves for slow moving and obsolete inventory at
December 31, 2001 compared to $14.0 million of inventory reserves at December
31, 2000. We regularly and routinely examine the need for such inventory
reserves at each of our businesses and make adjustments accordingly. We
consider, among other things, the amount of inventory on hand, as compared to
historical and projected usage of such inventory, when considering the
appropriate level of reserves. Our businesses are in the wireless
telecommunications industry, which is characterized by rapid technological
changes, which in turn result in rapid product design changes and new product
introductions. These rapid changes in technology and new product introductions
result, from time to time, in inventory obsolescence and the requirement for
inventory valuation reserves.

Our normal practice for recognizing revenue is at the time products are
shipped or services are performed. We also have limited amounts of sales of
software, engineering services and maintenance agreements which require us to
consider additional accounting rules as to when revenue should be recognized. As
described in Note 1 of the Notes to Consolidated Financial Statements, our
revenue recognition policies are in compliance with American Institute of
Certified Public Accountants Statement of Position 97-2 on software revenue
recognition. Sales of licensed products are recorded when shipped. Maintenance
revenue which is derived under separate contract, is recognized ratably over the
contract period. Our sales of services, including software, wireless
engineering, consulting and maintenance services, were less than 10% of
consolidated revenues and, accordingly, these service sales are not separately
stated in our Consolidated Statements of Operations.

QUARTERLY RESULTS OF OPERATIONS

The following are our unaudited quarterly consolidated statements of
operations for 2001 and 2000. We have prepared this unaudited information on a
basis consistent with the audited consolidated financial statements and have
included all adjustments, consisting only of normal recurring adjustments, that
we considered necessary for a fair presentation of our financial position and
operating results for the quarters presented. You should read this quarterly
financial data in conjunction with the historical Condensed Consolidated
Financial Statements and the related notes thereto included in our Quarterly
Reports on Form 10-Q filed with the Securities and Exchange Commission. In 2000
and 2001, we recorded several non-recurring items that impacted the
comparability of quarterly financial results, including restructuring charges.
Please refer to Note 13 of the Notes to Consolidated Financial Statements for
additional information regarding these items.

THREE MONTHS ENDED
---------------------------------------------------------------------------------------
MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31,
2000 2000 2000 2000 2001 2001 2001 2001
-------- -------- --------- -------- -------- -------- --------- --------
(IN THOUSANDS)

Sales......................... $88,859 $89,175 $107,690 $106,884 $108,543 $105,094 $91,319 $89,645
Cost of sales................. 63,477 61,591 75,760 76,838 78,639 77,983 69,877 69,843
------- ------- -------- -------- -------- -------- ------- -------
Gross profit................ 25,382 27,584 31,930 30,046 29,904 27,111 21,442 19,802
Operating expenses:
Selling, general and
administrative expenses... 14,343 13,137 13,373 13,418 14,365 13,988 13,864 14,559
Research and development and
product engineering
costs..................... 6,186 6,381 6,924 5,951 6,900 7,170 5,908 6,108
Amortization of goodwill.... 1,918 1,943 1,980 1,981 1,980 1,987 1,968 1,966
------- ------- -------- -------- -------- -------- ------- -------
Operating income (loss)..... 2,935 6,123 9,653 8,696 6,659 3,966 (298) (2,831)
Net interest expense.......... 1,961 2,208 2,369 2,495 2,595 2,510 2,375 2,767
------- ------- -------- -------- -------- -------- ------- -------
Income (loss) before taxes
and minority interest..... 974 3,915 7,284 6,201 4,064 1,456 (2,673) (5,598)
(Provision for) benefit from
income taxes................ (391) (1,634) (2,966) (2,539) (1,585) (565) 1,040 2,183
Minority interest............. (13) (39) (33) (6) (42) (45) (29) (29)
------- ------- -------- -------- -------- -------- ------- -------
Income (loss) from
continuing operations..... 570 2,242 4,285 3,656 2,437 846 (1,662) (3,444)
Discontinued operations....... 1,300 -- -- -- -- -- -- --
------- ------- -------- -------- -------- -------- ------- -------
Net income (loss)........... $ 1,870 $ 2,242 $ 4,285 $ 3,656 $ 2,437 $ 846 $(1,662) $(3,444)
======= ======= ======== ======== ======== ======== ======= =======

LIQUIDITY AND CAPITAL RESOURCES

As set forth in the Consolidated Statements of Cash Flows, $0.5 million of
cash was used by operations for the year ended December 31, 2001 as compared to
$2.6 million of cash used in the comparable 2000 period. This improvement in
cash usage is due primarily to collection of accounts receivable and a
deceleration of the increase in inventory, partially offset by lower income and
lower trade payables. From December 31, 1999 through March 31, 2001, our
consolidated inventory increased $60.0 million to $142.7 million, primarily to
support increasing sales levels and customer requirements for continued sales
growth beyond March 31, 2001. Our sales peaked in the first quarter 2001, and we
have had sequential quarterly declines in sales throughout the balance of 2001.
As a response to this decline in customer demand, we cut back production levels,
scaled back material receipts and reduced headcount. As a result of these
actions, our inventory declined by $24.8 million from March 31, 2001 to December
31, 2001, excluding the impact of the inventories received in the Bartley
acquisition in December 2001. We plan to continue to reduce inventory levels in
2002, but we expect the inventory decline in 2002 to be more modest than the
nine-month inventory reduction ending December 31, 2001.

We used $13.1 million in investing activities in 2001, due principally to
$10.0 million of capital expenditures and our acquisition of Bartley, offset, in
part, by proceeds from the sale of an unused facility. For the year 2000, $26.1
million of cash was used for investing activities, including $15.0 million of
capital expenditures and $8.5 million for the purchase of minority interests in
subsidiaries. We plan to spend up to $14.0 million for capital expenditures in
2002, and at December 31, 2001, $0.9 million of such expenditures is committed.
Cash used by financing activities for the year 2001 was $2.3 million, which
includes the repayment of borrowings offset, in part, by $4.9 million of cash
generated from a sale and leaseback transaction, as more fully described in Note
2 of the Notes to Consolidated Financial Statements. In 2000, cash generated by
financing activities was $20.8 million, resulting primarily from increased
borrowings. We changed the fiscal year-end of certain of our foreign
subsidiaries effective January 1, 2001. The Consolidated Statements of Cash
Flows for 2001 now includes these operations for the twelve-month period ended
December 31, 2001. The net cash flow for the two-month period ended December 31,
2000 of $20.4 million was primarily attributable to a $16.8 million increase in
borrowings and is shown separately in the Statements of Cash Flows. Note 1 of
the Notes to Consolidated Financial Statements includes the components of this
$20.4 million increase in cash.

At December 31, 2001, we had a total of $152.4 million lines of credit (see
the table below), and available unused worldwide lines of credit of $71.4
million, as compared with $63.9 million of available unused lines of credit at
December 31, 2000. Of the $71.4 million of available unused credit lines at
December 31, 2001, approximately $47.4 million of such lines are with various
European banks and expire in 2002. It is our intention to renew these credit
lines in 2002 for an additional one-year term. At December 31, 2001, we entered
into an amendment to our $105.0 million domestic revolving credit facility,
which expires December 31, 2003, that modified the financial covenants to levels
we believe can be achieved under current market conditions, and which provided
for enhanced collateralization of certain assets (see Note 2 of the Notes to
Consolidated Financial Statements).

AMOUNT OF COMMITMENT EXPIRATION PER PERIOD (AMOUNTS IN THOUSANDS)
--------------------------------------------------------------------
TOTAL AMOUNTS LESS THAN ONE TO THREE FOUR TO FIVE AFTER FIVE
OTHER COMMERCIAL COMMITMENTS (A) COMMITTED ONE YEAR YEARS YEARS YEARS
-------------------------------- ------------- --------- ------------ ------------ ----------

Lines of Credit..................... $152,400 $47,400 $105,000 -- --
Standby Letters of Credit (B)....... -- -- -- -- --
-------- ------- -------- --- ---
Total Commercial Commitments........ $152,400 $47,400 $105,000 -- --
======== ======= ======== === ===

---------------

(A)We have no guarantees, standby repurchase obligations or other commercial
commitments at December 31, 2001.

(B) Up to $25.0 million of standby letters of credit availability is included in
the lines of credit commitment.

The following is a summary of the timing of payments due for various
contractual obligations at December 31, 2001 including long-term debt, capital
lease obligations and operating leases. During 2003, approximately $67.0 million
of debt outstanding at December 31, 2001 under the Company's domestic revolving
credit agreement becomes due. It is the Company's intention to refinance these
borrowings under a similar agreement prior to the expiration of this revolving
credit agreement at December 31, 2003.

PAYMENTS DUE BY PERIOD (AMOUNTS IN THOUSANDS)
------------------------------------------------------------
LESS THAN ONE TO FOUR TO AFTER
CONTRACTUAL OBLIGATIONS (A) TOTAL ONE YEAR THREE YEARS FIVE YEARS FIVE YEARS
--------------------------- -------- --------- ----------- ---------- ----------

Long-Term Debt.......................... $148,542 $11,490 $ 87,396 $17,539 $32,117
Capital Lease Obligations............... 6,652 1,174 1,907 1,435 2,136
Operating Leases........................ 40,505 7,155 13,030 7,880 12,440
-------- ------- -------- ------- -------
Total Contractual Cash Obligations...... $195,699 $19,819 $102,333 $26,854 $46,693
======== ======= ======== ======= =======

---------------

(A)We have no unconditional purchase obligations or other long-term obligations
at December 31, 2001.

We have entered into a program to lease some of our test equipment and
computer workstation equipment. The program is expected to improve our economics
and cash flow when compared to

purchasing this equipment directly. We leased approximately $5.0 million of
equipment in 2001 under this program and expect to lease approximately $1.0
million in 2002. These lease transactions are being recorded as operating leases
in our consolidated financial statements.

In December 2001, we acquired substantially all the assets and certain
liabilities of Bartley. The cost of the acquisition includes the issuance of
approximately 2.3 million common shares of Allen Telecom Inc. common stock, as
well as $0.4 million of cash payments to Bartley and the repayment of $3.2
million of debt, as more fully described in Note 9 of the Notes to Consolidated
Financial Statements.

We examine, from time to time, various strategic acquisitions in order to
accelerate growth in our product lines. In addition, our geolocation product
line has the potential for significant sales growth if additional carriers
choose us for network-based geolocation systems. Were we to invest in strategic
acquisitions or require a significant investment in working capital resulting
from the rapid expansion of our E 911 geolocation products business, we may need
to consider the need for additional financing. We have filed a Registration
Statement with the Securities and Exchange Commission to register one million
shares of convertible preferred stock, with an aggregate offering price of $50.0
million. The Registration Statement also covers the additional shares to be
issued if the underwriters exercise the over allotment option to purchase up to
an additional 150,000 shares. Most of the proceeds from this offering will be
used to repay a portion of the indebtedness outstanding under our domestic
revolving credit facility and will provide for additional flexibility under our
credit lines for financing working capital growth or strategic investments. Our
domestic revolving credit facility of $105.0 million is subject to a reduction
in commitment levels by the lesser of $30.0 million or 60% of the net proceeds
from this offering.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our primary market risk exposure relating to derivatives results from the
use of foreign currency forward contracts to offset the impact of currency rates
against accounts receivable. There were no open contracts related to accounts
receivable as of December 31, 2001. We entered into several foreign currency
forward contracts in 2001 to offset the impact of currency rate change with
regard to certain intercompany payable obligations which were still open at
December 31, 2001. We do not enter into derivative instrument transactions for
trading or speculative purposes.

Our on-balance sheet instruments that are subject to interest rate
fluctuations are various components of long-term debt. We believe the risks are
minimal. As of December 31, 2001, 48.7% of our long-term debt is fixed rate debt
and not subject to interest rate fluctuation. The variable rate debt is
primarily made up of our domestic revolving credit facility and industrial
revenue bonds. The domestic revolving credit debt interest is determined on a
LIBOR or prime rate basis, at our option. The industrial development bonds carry
interest rates that are established based on the low yield, tax free bond
market.

The tables below provide information about our derivative transactions and
other financial instruments that are sensitive to changes in exchange and
interest rates. For derivative instruments, the table presents December 31, 2001
and December 31, 2002 contract amounts and related average contractual exchange
rates by expected maturity date. For debt obligations at December 31, 2001, the
table presents principal payments and related weighted average interest rates by
expected maturity dates.

CONTRACT VALUE FAIR VALUE
AT DATES MATURING IN AT DATES MATURING IN
--------------------- ---------------------
ANTICIPATED TRANSACTIONS AND RELATED DERIVATIVES 2001 2002 2001 2002
(U.S. $ EQUIVALENT IN THOUSANDS) --------- --------- --------- ---------

Canadian Dollar Functional Currency (CAD)
Foreign Exchange Agreements:
Receive U.S. dollars/Pay Canadian dollars
Contract Amount............................... -- $ 325.4 -- $ 324.5
Avg. Contractual Exchange Rate................ -- 1.5862 -- 1.5917
Euro Functional Currency (EURO)
Foreign Exchange Agreements:
Receive U.S. dollars/Pay Euros
Contract Amount............................... $ 988.6 -- $1,036.4 --
Avg. Contractual Exchange Rate................ 1.1127 -- 1.0613 --
Receive Euros/Pay U.S. dollars
Contract Amount............................... -- $2,004.2 -- $2,047.9
Avg. Contractual Exchange Rate................ -- 0.8714 -- 0.8904
German Mark Functional Currency (DM)
Foreign Exchange Agreements:
Receive DM/Pay U.S. dollars
Contract Amount............................... $1,784.7 -- $1,929.8 --
Avg. Contractual Exchange Rate................ 0.4462 -- 0.4825 --

EXPECTED MATURITY DATE
---------------------------------------------------------- FAIR
DEBT OBLIGATIONS 2002 2003 2004 2005 2006 THEREAFTER TOTAL VALUE
(U.S. $ EQUIVALENT IN THOUSANDS) ------- ------- ------- ------ ------ ---------- ------- -------

Long Term Debt:
Fixed Rate (US)............ $10,975 $10,979 $ 7,986 $7,980 $7,975 $17,168 $63,063 $63,063
Avg. interest rate....... 6.6% 6.6% 6.6% 6.6% 6.6% 6.6% 6.6% 6.6%
Fixed Rate (EURO).......... $ 1,343 $ 1,628 $ 1,048 $1,220 $1,240 $ 5,419 $11,898 $11,898
Avg. interest rate....... 5.7% 5.0% 4.1% 3.8% 3.7% 3.2% 3.9% 3.9%
Variable Rate (US)......... -- $67,005 -- -- -- $11,900 $78,905 $78,905
Avg. interest rate....... -- 6.0% -- -- -- 2.6% 5.5% 5.5%
Variable Rate (EURO)....... -- $ 33 -- -- -- -- $ 33 $ 33
Avg. interest rate....... -- 6.1% -- -- -- -- 6.1% 6.1%

BUSINESS

OVERVIEW

- Base Station Subsystems and Components, including filters, duplexers,
combiners, amplifiers and microwave radios;

- Repeaters and In-Building Coverage Products, including off-air repeaters,
optical repeaters, low power distributed indoor antenna solutions, tower
mounted amplifiers and bi-directional boosters;

- Base Station and Mobile Antennas, including panel, omni-directional,
glass-mounted and point-to-point antennas;

- Geolocation Products, including our GEOMETRIX wireless 911 caller
location system; and

- Wireless Engineering and Consulting Services, including frequency
planning for microwave and other wireless networks, system design and
analysis and cell site field engineering.

RECENT DEVELOPMENTS

Amendment to Revolving Credit Facility

We recently entered into an amendment to our revolving credit facility,
dated as of December 31, 2001, that modified the financial covenants contained
therein to levels we believe could be achieved under current market conditions.
The amendments permit us to maintain a higher leverage ratio, set lower
benchmarks for earnings before interest, income taxes, depreciation and
amortization, and establish lower minimum fixed charge coverage ratios over
several time periods through mid- to late 2003. We also agreed to cause some of
our domestic subsidiaries to guarantee our obligations under our revolving
credit facility, to pledge some of the stock of our foreign subsidiaries and to
place a mortgage on certain real estate owned by us. We entered into the
amendment because of concerns regarding our ability to meet the covenants
contained in our revolving credit facility.

Agreement with AT&T Wireless

AT&T Wireless recently selected our GEOMETRIX wireless 911 caller location
systems from our Grayson Wireless Division for installation in selected AT&T
Wireless networks.

The network-based GEOMETRIX systems are compatible with AT&T Wireless' TDMA
(digital) and AMPS (analog) network technologies and customer handsets. AT&T
Wireless has agreed to install the GEOMETRIX systems pursuant to the FCC's Phase
II E 911 regulations. The system automatically locates and forwards the caller
position information to public safety agencies that receive 911 calls.

Patent Litigation

Completion of Bartley R.F. Systems, Inc. Acquisition

expected to be completed early in the second quarter of 2002 and is projected to
result in annual cost savings of approximately $4.0 to $5.0 million. The
acquisition is expected to be accretive to our earnings in its first full year.
In connection with the acquisition, we recorded a reserve for restructuring
costs of approximately $2.3 million in the fourth quarter of 2001.

INDUSTRY DYNAMICS

To further enhance capacity and performance of wireless networks, wireless
technology has evolved from first generation analog technology, or 1G, in the
early 1980s to second-generation digital voice and data technologies, or 2G,
which was introduced in most networks in the early and mid-1990s. These digital
systems provide improved network capacity and signal quality and remain the
current standard for most wireless networks. While the build out of 2G networks
continues, an increasing demand for additional data capacity and transmission
speeds that permit wireless transmission of integrated voice, data, Internet and
video traffic has caused OEMs and carriers to begin to develop new equipment and
networks based on advanced technologies, such as 2.5G and 3G.

2.5G technology enable carriers to upgrade their existing 2G networks with
certain software and hardware enhancements. These upgrades often require
significant investments in software and equipment, but generally do not require
the comprehensive new infrastructure equipment investment required for 3G
networks. In addition, while these upgraded networks provide improvements in
capacity, coverage and performance, they have significantly less bandwidth
capacity and transmission speeds than 3G networks are expected to provide.

Deployment of 3G Technology

In order to address these future network requirements, many carriers are
expected to ultimately spend a considerable amount of capital upgrading their
mobile networks to 3G, or third generation, technologies. These technologies
provide a number of advantages over current mobile network technologies,
including the ability to deliver voice, data and multimedia services, provide
incremental network capacity and improve operating efficiencies. 3G is expected
to provide high capacity broadband wireless data services at speeds of up to two
megabits per second, with the capacity and speed to support voice, data, mobile
Internet access and full-motion video. The use of mobile wireless devices for
Internet access and other data transmissions is expected to increase
substantially over the next several years. 3G technology is also expected to
often provide incremental network capacity and operating efficiencies.

Some major carriers in Europe and Asia began a limited initial build out of
the first 3G networks in 2001. Regulatory agencies in most European countries,
Japan and Korea have already licensed 3G frequencies, with carriers spending
over $100.0 billion for these licenses to date. In the U.S., the FCC is expected
to award licenses for 3G frequencies in the next several years, which we
anticipate will be

followed by an extensive 3G infrastructure build out. As a result, predominantly
all of the current demand for 3G infrastructure equipment is driven by the
rollout of 3G networks in Europe and Asia.

The deployment of new networks incorporating 3G technology will require the
timely development, manufacture and installation of new or advanced
infrastructure equipment, including power amplifiers, base stations, subsystems,
antennas and repeaters that are specifically designed for the newly licensed
frequencies. In most cases, that equipment will need to be specifically tailored
to the new licensed frequencies and comply with the more stringent design
specifications. As a result, many wireless OEMs are currently working with
qualified vendors to design and manufacture new systems and components for 3G
networks. For example, wider bandwidth channels and greater data transmissions
will require next generation, multi-channel power amplifiers that are highly
linear and compatible with the new 3G frequencies. In addition, we believe that
many OEMs are outsourcing more of their needs for certain wireless
communications equipment, such as next generation power amplifiers, which, prior
to 3G, were primarily manufactured in-house by OEMs. For these reasons, we
believe that the build out of new 3G networks will create substantial new
product opportunities for some qualified vendors which, in the case of next
generation power amplifiers, we estimate to be in the $1.0 to $2.0 billion range
annually.

The deployment of 3G networks will also require a greater number of base
stations per coverage area because of increased propagation losses at the higher
frequencies and the need for greater accuracy of data transmissions. As a
result, despite the increased efficiency of base station technology, we believe
the number of base stations required to support 3G will likely increase by two
to four times the 1G equivalent for the same coverage area. We believe we are
well positioned to capitalize on the 3G spending cycle.

Wireless Geolocation Markets

We believe based on our recent contract wins with both Verizon Wireless and
AT&T Wireless that the market for ancillary wireless services, particularly E
911, is developing. As new wireless technologies advance in capability and the
number of subscribers grows, increased governmental focus in the U.S. is being
placed on automatically identifying the location of wireless 911 callers to the
local police or fire department. According to the Cellular Telecommunications &
Internet Association, there were over 51 million wireless calls to 911 in the
U.S. in 2000, an 18.0% increase over 1999. Previous solutions did not accurately
identify the location of the caller or dispatch center, creating a need for a
more effective solution. To promote the availability of accurate geolocation
services for wireless 911 calls in the U.S., the FCC has adopted regulations
that require carriers to begin implementing geolocation capabilities based on
strict standards. Geolocation solutions are being deployed or evaluated by a
number of carriers in the U.S. that must comply with the new FCC regulations.

Equipment suppliers and carriers have been developing a variety of
network-based and handset-based solutions to provide enhanced 911, or E 911,
geolocation capabilities. Our network-based GEOMETRIX product is capable of
meeting the requirements established by the FCC and meeting the needs of mobile
carriers, putting us in a favorable position to capitalize on the growth of E
911 network spending. This capability is expected to lead to multiple product
application opportunities for telecommunications equipment manufacturers.
Opportunities include ancillary services such as fleet management, concierge
services, mobile commerce and wireless information directories.

THE ALLEN TELECOM SOLUTION

We provide reliable, innovative and customized products and services that
enable OEMs and carriers to accommodate the demand for wireless infrastructure
equipment and services. Our solutions allow our customers to focus on their own
core competencies by outsourcing their needs for increasingly complex components
and subsystems. We believe our customers are striving to consolidate their
supplier base to a core group of wireless equipment providers and carriers to
reduce the supply and management risks associated with a fragmented supplier
base. As a result, significant opportunities exist for qualified vendors with
the ability to design, manufacture and deliver, in a timely manner, sufficient
quantities of highly integrated, cost effective subsystems and components that
meet the exacting specifications of the customer.

Similarly, significant opportunities exist for experienced providers of wireless
engineering services related to infrastructure design and development.

We have positioned our company to benefit from these opportunities in the
wireless communications markets. Our design capabilities and technologies
address the increasing demands of the wireless markets for high quality,
customized products and services that provide enhanced performance at cost
effective prices. Our solution enables OEMs and carriers to bring new and
improved wireless services to market on a more efficient and timely basis. Our
solution is based on our ability to:

- PROVIDE RELIABLE, COST EFFECTIVE PRODUCTS AND SERVICES. We deliver
sophisticated, high quality, cost effective products in volumes necessary
to meet our customers' needs. Our emphasis on quality manufacturing and
timely delivery has enabled us to achieve qualified vendor status with
many of the leading industry OEMs and wireless communication carriers,
which gives us a competitive advantage over those who have not achieved
that status.

- OFFER A BROAD RANGE OF COMPLEMENTARY PRODUCTS AND SERVICES. We offer a
broad range of wireless infrastructure equipment, subsystems, components
and services. Our complementary products and services support all major
wireless standards and frequencies and are designed to improve the
performance, geographic coverage and capacity of existing and emerging
wireless networks. As a result, our customers are able to reduce
operating costs by partnering with a single supplier for many of their
product and service needs.

- REDUCE TIME TO MARKET. We accelerate time to market for new and enhanced
products, enabling us to introduce products earlier than many of our
competitors, thereby gaining a competitive advantage. Our product
development teams collaborate with both our customers and our component
suppliers at the earliest stage of new product identification to
facilitate designs that meet customer requirements, reduce costs and
improve performance upon integration into a customer's system and improve
our customer's time to market. We also continuously evaluate the
manufacturing considerations of our products in order to shorten product
development cycles, reduce time to market and lower manufacturing costs.

- OFFER SUPERIOR MANUFACTURING OF INTEGRATED AND CUSTOMIZED PRODUCTS. We
provide high performance subsystems and components by effectively
integrating a number of related components, functions and technologies
into a single product. Many of these products are highly customized and
manufactured in accordance with exacting customer specifications. Our
integrated solution enables our customers to improve system performance
and reduce costs.

THE ALLEN TELECOM STRATEGY

Our objective is to increase our presence as a major supplier of wireless
infrastructure to the world's leading OEMs and carriers and to increase the
breadth of our product offerings to these customers. By successfully executing
on this strategy, we believe that we will be well-positioned to increase
revenue, profits and stockholder value. Our strategy to achieve this objective
is to:

KEY ACQUISITIONS

We focus our acquisition efforts on companies with strong engineering and
technical capabilities, proven management teams, superior products and strong
customer relationships. Our acquisitions have been an important element in
strengthening our management team, growing our business, extending our
international presence and expanding our product and service offerings and
technological expertise. Since 1990, we have acquired a number of companies,
including the following key companies:

YEAR COMPANY ACQUIRED PRIMARY LOCATION PRIMARY PRODUCTS OR SERVICES ACQUIRED
---- ---------------- ---------------- -------------------------------------

2001 Bartley R.F. Systems, Inc. U.S. RF filters and filter-related
subsystems
1997 Telia S.A. France Power amplifiers
1996 Tekmar Sistemi S.r.l. Italy In-building coverage systems
1994 MIKOM G.m.b.H Germany Repeaters
1994 FOREM S.r.l Italy Base station subsystems and components
1992 Comsearch U.S. Wireless engineering services
1992 Decibel Products U.S. Base station antennas
1990 Grayson Wireless U.S. Repeaters

---------------
Note: Many of our acquisitions were completed in stages. The years of
acquisition set forth in the table represent, in each such case, the first year
in which we owned a majority of the acquired company, the balance of which we
acquired in subsequent years. Decibel Products and Comsearch were owned by
Alliance Telecommunications Corp., which we acquired in 1992.

PRODUCTS AND SERVICES

Our products and services consist of five product lines: (i) Base Station
Subsystems and Components; (ii) Repeaters and In-Building Coverage Products;
(iii) Base Station and Mobile Antennas; (iv) Geolocation Products; and (v)
Wireless Engineering and Consulting Services. We provide our products and
services on a global basis to many of the world's largest OEMs and carriers. We
expect our business to benefit from the need for expanded coverage, greater
capacity and improved performance of existing and emerging wireless networks.

Base Station Subsystems and Components

We are one of the largest suppliers of base station subsystems and
components, supplying many different customized subsystems and components that
are incorporated in OEM equipment for cell site installation. Our products serve
all major wireless standards and frequencies, including emerging 3G networks.
Our base station subsystems and components include:

- Filters that ensure that incoming signals are received and outgoing
signals are transmitted clearly and without interference;

- Duplexers that are stationed at most cell site transceivers to allow a
single antenna to be used for the simultaneous transmission and reception
of radio signals;

- Power Amplifiers that enhance the reception of weak signals or boost
outgoing signals, including low noise and tower mounted amplifiers;

- Combiners that combine multiple radio frequencies for delivery to one
antenna system;

- Auto-Tune Combiners that adjust automatically to changes in frequencies;

- Microwave Radios that are used primarily to provide, at selected
frequencies, communication links between a base station and the network;
and

- Related Products, such as equipment racks, connectors and cables.

These products are marketed and sold primarily under the FOREM, Decibel
Products and Telia names and accounted for $183.0 million, or 46.3%, and $190.9
million, or 48.6%, of our total sales in 2001 and 2000, respectively.

We recently introduced next generation single and multi-carrier,
highly-linear power amplifiers. Such products are usually located within base
stations and amplify the power of the wireless transmission with minimal
distortion and interference. These products are capable of processing multiple
frequencies and are available for a number of mobile wireless standards,
including 3G. We are currently working with a major OEM to design its next
generation power amplifier product line.

Repeaters and In-Building Coverage Products

Our repeaters and in-building coverage products support both coverage and
capacity enhancement for carriers. We provide turnkey, customized product
applications for major projects throughout the world involving highway tunnels,
subway and railway systems, airports, convention centers and the Australian
Olympic venues. Our products include:

- Repeaters that expand coverage and fill coverage gaps caused by
obstructions, such as mountains, tunnels and buildings, including high
power and low power off-air repeaters and optical repeaters;

- Distributed Antenna Systems for mobile wireless communications,
broadcasting, high speed data links and broadband coverage systems,
including low power fiber optic and cable distributed antennas;

- Bi-Directional Boosters that amplify transmitted and received signals at
the cell site; and

- Test Equipment and Analysis Software that measure and analyze radio
transmission characteristics for optimization of wireless communications
networks.

These products are marketed and sold under the MIKOM, Grayson Wireless and
Tekmar Sistemi names, and accounted for $94.5 million, or 24.0%, and $78.8
million, or 20.1%, of our total sales in 2001 and 2000, respectively.

Base Station and Mobile Antennas

We are a leading manufacturer of base station and mobile antennas serving
all major wireless standards and frequencies. We manufacture a comprehensive
line of base station antennas, including:

- Omni Antennas that broadcast signals in a full 360-degree circular
pattern;

- Directional and Panel Antennas that concentrate signals in a particular
direction, thereby increasing capacity and coverage;

- Sectorized Array Antennas that generate multiple beams; and

- Broadband Antennas that process multiple frequency bands on a single
antenna.

We continually enhance our base station antennas to optimize current 2G
networks. We also have recently developed base station antennas for 3G networks,
including dual band antennas that transmit and receive RF signals simultaneously
for multiple frequencies in an integrated antenna. We complement our base
station antennas with customer service centers that deliver base station
antennas, cable and other equipment such as mounting hardware, monitors, sensors
and jumpers directly to cell sites to aid in the deployment of our base station
antennas. The cable is delivered using our patented dispenser with connectors
and other hardware already attached, allowing easier, faster installation.

We also provide mobile vehicular antennas that allow two-way
communications, including dual band, glass-mounted and global positioning
antennas. We design and develop new vehicular antennas to address changing
wireless technologies and introduced a series of wireless data service antennas.
In addition, we provide mobile antennas for satellite-based digital audio radio
systems.

Our base station and mobile antenna products and services are marketed
under the Decibel Products and Antenna Specialists names, and accounted for
$88.2 million, or 22.4%, and $97.8 million, or 24.9%, of our total sales in 2001
and 2000, respectively.

Geolocation Products

We are one of two recognized suppliers of network-based geolocation systems
capable of providing carriers with the equipment and software necessary to
locate wireless 911 callers. Our GEOMETRIX wireless location system is based on
position calculations utilizing time difference of arrival, or TDOA, and angle
of arrival, or AOA, triangulation techniques. We believe our network-based
GEOMETRIX product is capable of exceeding the accuracy and reliability
requirements set by the FCC for E 911 networks. Our system can locate calls
which transition between analog and digital sites, and calls in which the caller
is a subscriber, roamer or non-subscriber. Our 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, our 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. Our geolocation products accounted for $7.8 million, or 2.0%, of our
total sales during 2001. These products did not account for any of our sales in
2000 or 1999.

In October 2001 we installed and activated the nation's first wireless E
911 caller location system in St. Clair County, Missouri. The GEOMETRIX location
system's actual performance has exceeded the Phase II location accuracy
standards set by the FCC. Our network-based GEOMETRIX product was also recently
selected by AT&T Wireless to provide wireless 911 caller location systems for
installation in

selected TDMA AT&T Wireless networks. See "-- Recent Developments -- Agreement
with AT&T Wireless."

Wireless Engineering and Consulting Services

We are 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 carriers to assist in determining and analyzing
network coverage requirements based on area topography and demographics. Our
engineering expertise in spectrum sharing, microwave interconnectivity and cell
system design has enabled us to obtain orders from most major domestic carriers.
Our spectrum sharing software is currently licensed and utilized by major
operators and consultants to perform analysis in most domestic PCS markets, and
our software for microwave interconnectivity is operational in Asia, Europe,
North America and South America.

Our wireless engineering and consulting services are marketed and provided
under the Comsearch name and accounted for $21.1 million in sales, or 5.3%, and
$25.1 million, or 6.4%, of our total sales in 2001 and 2000, respectively.

CUSTOMERS

We sell our products and services to OEMs, carriers and product
distributors located throughout the world. The OEM market for our products
consists of a relatively small number of potential customers. The carrier market
for our products, while experiencing some consolidation, is a larger and more
broadly dispersed market.

During 2001, our OEM customers accounted for 42.6% of our total sales and
our carriers accounted for 57.4% of our total sales. During 2001, Siemens AG
accounted for 10.2% of our sales and was our only customer to account for more
than 10.0% of our total sales. Our top ten customers for 2001 were:

Alcatel SA Nortel Networks Corporation
AT&T Wireless, Inc. Orange SA
Lucent Technologies Inc. Siemens AG
Motorola, Inc. Sprint Corporation
Nextel Communications, Inc. Verizon Wireless

During 2001, our customers located outside the U.S. accounted for 60.8% of
our total sales. We believe that, since many of our domestic customers
incorporate our products into their products, many of which are ultimately
delivered to end-users located outside the U.S., a higher percentage of our
products is ultimately delivered to customers located outside the U.S.

SALES AND MARKETING

We dedicate a specific team of experienced and knowledgeable engineering,
sales and marketing professionals to market our products directly to each OEM
customer and many of our carrier customers. Each dedicated team provides
engineering and customer service support throughout and after the sales and
development cycle of a specific product, thereby developing collaborative
working relationships between our team and our customers' management,
engineering, technical, design, purchasing and production personnel. This
collaboration with multiple levels of a customer's organization, particularly
during the design, qualification and early production phases, allows us to
become an integral part of new product development and a logical supplier of
products for our customers.

We market and sell our products and services worldwide to carriers
primarily through our direct sales forces. We maintain sales offices in the
following 19 countries: Argentina, Australia, Austria, Brazil, Canada, China,
the Czech Republic, France, Germany, India, Italy, Mexico, Norway, Peru,
Singapore, Slovakia, Switzerland, the United Kingdom and the U.S. We supplement
our direct sales force with a network of manufacturers' representatives. Our
sales personnel are responsible for managing specified carrier accounts and
specified products or groups of products in their sales territories. These sales
personnel

have the engineering and technical expertise to identify carriers' needs and
provide them with tailored solutions or off-the-shelf products.

RESEARCH AND DEVELOPMENT

We believe that our research and development competencies are key reasons
for our industry leadership position and are critical to our continued success.
Because the wireless communications industry is characterized by rapidly
changing technologies and evolving customer specifications and industry
standards, providers of products and services to the industry must continually
focus on their research and development efforts. Each of our product lines
consists of highly engineered, innovative products for our customers.

Generally, our research and development efforts are managed and focused on
a product by product basis. We have 12 research and development facilities
located in the Czech Republic, France, Germany, Italy and the U.S. and as of
December 31, 2001 we employed approximately 425 engineers and other technical
personnel who are dedicated to our research and development and other
engineering efforts. Our research and development and other engineering efforts
generally can be characterized as follows:

- we collaborate closely with many of our customers to design and build new
products or modify existing products to exacting specifications required
by our customers for their network systems and solutions;

- we design and manufacture enhancements and improvements to our existing
products in response to our OEM or carrier customers' requests or
feedback; and

- we independently design and build new products in anticipation of
changing wireless communications technologies, evolving customer
specifications and industry standards, developing market opportunities or
changing market dynamics.

As a result of our collaborative relationships with our customers, we
believe we are able to compete more effectively. Collaboration with our
customers allows us to:

- reduce the costs and minimize the risks of research and development for
us and our customers;

- reduce the costs and time associated with establishing new markets for
our products;

- establish ready markets for our products that meet our customers'
specifications;

- solidify and enhance our working relationships with our customers; and

- share our technical expertise and experience with our customers.

INTELLECTUAL PROPERTY

We hold over 100 patents, and have a number of patents pending, in the
U.S., Canada and certain European countries. While we consider our patents to be
of significant value, we believe that our technological position depends
primarily on the experience, the technical competence and the creative ability
of our engineering and production staff in the areas of product design and
manufacturing. We also hold a number of registered trademarks to protect certain
of our brand names.

We zealously protect our patents, copyrights, trademarks, trade secrets and
other proprietary information and intellectual property. Our company policies
require our key employees and any third party to whom we release proprietary
information to execute confidentiality agreements.

MANUFACTURING

We believe that our core competencies of product design technology,
engineering expertise, proprietary manufacturing processes and comprehensive
testing permit us to consistently meet or exceed our customers' quality
specifications. All of our OEM and many of our carrier customers have recognized
our ability to consistently meet or exceed exacting product specifications by
granting us qualified vendor status, which gives us a competitive advantage over
our competitors who have not achieved that status. We

maintain 16 manufacturing facilities located in Australia, Brazil, China, the
Czech Republic, France, Germany, Italy, Mexico and the U.S., most of which are
ISO-9001 or ISO-9002 certified.

A substantial amount of our component production is outsourced to contract
manufacturers, many of whom also hold such ISO-9001 or ISO-9002 certification.
Our practice of outsourcing a portion of our manufacturing needs permits us to
maintain a flexible workforce and meet fluctuating customer demands and
requirements.

We generally attempt to utilize several alternative supplier sources for
the raw materials, subsystems and components required for our products. For
certain raw materials or components, however, we utilize a small number of
suppliers and, in very few instances, a single source supplier. In these
instances, we believe the risks associated with purchasing raw materials or
components from a limited number of suppliers are justified by the suppliers'
commitment to us, which is consistent with our commitment to our customers, to
provide lower pricing, more timely delivery and higher quality. We believe that,
together with our contract manufacturers and planned manufacturing plant
expansion, we have the capacity to meet the anticipated orders for our products.

COMPETITION

The base station subsystems and components market for our products is
highly competitive. In the base station subsystems and components market, we
compete primarily with Allgon AB, Filtronic PLC, Radio Frequency Systems, Inc.,
a division of Alcatel SA, and REMEC, Inc.

There is an increasing number of competitors supplying products and
services to carriers. Our primary competitors for our base station and mobile
antenna products are Allgon AB, Andrew Corporation, EMS Technologies, Inc.,
Kathrein, Inc. and Radio Frequency Systems, Inc., a division of Alcatel SA. For
our repeater, test and measurement equipment and in-building coverage products,
our primary competitors are Agilent Technologies, Inc., Allgon AB, Kathrein,
Inc., LGC Wireless Inc. and Repeater Technologies, Inc. Our primary competitors
for our wireless engineering and consulting services are LCC International and
Wireless Facilities, Inc. In the geolocation products market, our primary
competitor for our geolocation products is TruePosition, Inc. In addition,
competitors for our geolocation products include a number of manufacturers who
have developed or proposed handsets for the handset-based geolocation solution.

We believe that we are currently one of the top three competitors in the
markets for our base station subsystems and components, repeaters and
in-building products and base station antennas, and are a leading competitor in
the markets for our wireless engineering and consulting services and mobile
antennas. Some of our competitors have substantially greater financial,
marketing and other resources and better name recognition than we do. We believe
the principal factors that allow us to compete effectively in our marketplace
include:

- our ability to manufacture high volume, quality products in a timely
manner;

- the strength of existing customer relationships;

- proximity to existing and potential customers of our sales force, product
development and manufacturing facilities;

- low cost production and competitive pricing;

- our strong reputation and well-recognized brands;

- accountability and customer service;

- financial resources;

- management expertise; and

- expertise in existing and emerging technologies.

In addition to these factors, we believe that our ability to develop and
manufacture our E 911 geolocation products in-house provides us with a
competitive advantage over many of our competitors.

GOVERNMENT REGULATION

Certain of our wireless communications products must conform to a variety
of domestic, foreign and international regulatory specifications established to,
among other things, maintain public safety, avoid interference among users of
radio frequencies and permit interconnection of equipment. Regulatory bodies
worldwide have adopted and are adopting or revising standards for wireless
communications products, which standards may change from time to time. The
emergence or evolution of regulations and industry standards for wireless
products, through official standards committees or widespread use by operators,
could require us to modify our products.

Our business depends on the availability of radio frequencies to carriers
for use in the operation of two-way wireless communications systems. Radio
frequencies are subject to extensive regulation under the laws of the United
States, foreign laws and international treaties. Each country has different
regulations and regulatory processes for wireless communications equipment and
uses of radio frequencies. The regulatory environment in which our customers
operate is subject to significant change, the results and timing of which are
uncertain. The process of establishing new regulations for wireless frequencies
and allocating such frequencies to carriers is complex and lengthy. For example,
in many countries, including the U.S., it may take years before 3G wireless
communications will be available to the public because of the need to: (i)
determine what frequencies to use for the service; (ii) clear the necessary
spectrum of its current users, if necessary; (iii) establish regulations for
this new wireless service; (iv) auction the spectrum or otherwise determine the
frequency licensees; and (v) build out the necessary infrastructure. Our
customers and potential customers may not be able to obtain spectrum licenses
for their planned uses of our equipment. Failure by the regulatory authorities
to allocate suitable, sufficient radio frequencies for such uses in a timely
manner could deter potential customers from ordering our products and seriously
harm our business.

Unlike calls placed from landline telephones in the U.S., calls for
emergency assistance from wireless phones are not currently traceable to
specific locations. In response to this public safety issue, the FCC issued a
series of orders requiring that carriers implement a system to locate callers as
early as October 2001. The rules specify that network-based solutions must cover
either one-half of such carrier's coverage area or one-half of such carrier's
subscribers commencing the later of October 1, 2001 or six months after the
local public safety answering point has requested the service, and the entire
coverage area or all subscribers by October 1, 2002 or within 18 months of a
request by a local public safety answering point, whichever is later. Carriers
choosing handset-based systems must begin marketing handsets commencing October
1, 2001 and may activate only handsets that are geolocation-capable after
December 31, 2002. Handset-electing carriers will further be required to have
reached 95% penetration of all handsets with geolocation capability by December
31, 2005. Carriers must choose between satisfying the FCC's requirements under a
handset-based approach or a network-based approach or petition the FCC for a
waiver allowing an extension of the implementation deadline for a hybrid or
different approach. We offer a network-based system for locating cellular phone
users making 911 calls. Most carriers, however, have indicated to the FCC that
they will adopt handset-based or other alternative solutions. Most carriers are
seeking waivers and/or delays in the FCC's implementation of these requirements
and the FCC has granted a waiver to one carrier allowing a hybrid approach and
delaying such carrier's implementation requirements. Our sales of this product
will be affected by any changes in the FCC's E 911 rollout or other
requirements, by the decisions of carriers to use network-based, handset-based
or other E 911 systems and the timing of requests made by local public safety
answering points.

EMPLOYEES

As of December 31, 2001, we had approximately 2,700 employees. We believe
our future success will depend on our continued ability to attract, retain,
integrate and motivate qualified personnel. None of our employees is represented
by a labor union and we have not experienced any work stoppage in any of our
existing businesses. We place a high value on maintaining a rewarding work
environment for our employees, who we believe are a key factor in our success.
We consider our relationship with our employees to be good.

PROPERTIES AND FACILITIES

As of December 31, 2001, our continuing operations were conducted in 54
facilities in ten states in the U.S. and 19 foreign countries. Our product
development, manufacturing and distribution facilities for our Wireless
Communications Equipment segment occupy approximately 1.2 million square feet of
which approximately 1.0 million square feet are rented under operating leases.
Our principal manufacturing and service facilities for the Wireless
Communication Equipment segment are located in Australia, Brazil, China, the
Czech Republic, France, Germany, Italy, Massachusetts, Mexico, Nevada, Ohio,
Texas and Virginia. Our Wireless Engineering and Consulting Services segment
leases approximately 67,000 square feet in Virginia.

All machinery, plants, warehouses and office spaces are in good condition
and are reasonably suited and adequate for the purposes for which they are
presently used.

LEGAL PROCEEDINGS

We are also a party to various other legal proceedings, lawsuits and other
claims arising in the ordinary course of our business involving such matters as
contract disputes, product liability, casualty claims, employment practices and
intellectual property infringement. We do not believe that such other
litigation, if adversely determined, would have a material adverse effect on our
business, financial position, results of operations or cash flow.

ABOUT US

Our executive offices are located at 25101 Chagrin Boulevard, Beachwood,
Ohio 44122-5687, and our telephone number is (216) 765-5800.

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Our directors and executive officers and their respective ages and
positions are set forth below.

NAME AGE POSITION
---- --- --------

Robert G. Paul............................ 59 President, Chief Executive Officer and Director
Robert A. Youdelman....................... 59 Executive Vice President and Chief Financial Officer
Peter G. de Villiers...................... 48 Vice President
James L. LePorte, III..................... 47 Vice President -- Finance
Laura C. Meagher.......................... 41 Secretary and General Counsel
Roger L. Schroeder........................ 48 Treasurer and Assistant Secretary
Philip Wm. Colburn........................ 73 Chairman of the Board
J. Chisholm Lyons(1)...................... 74 Vice Chairman of the Board
Sheldon I. Ausman......................... 68 Director
John F. McNiff(1)......................... 59 Director
Charles W. Robinson(2).................... 82 Director
Dr. Martyn F. Roetter(2).................. 57 Director
Gary B. Smith(1).......................... 43 Director
Kathleen M.H. Wallman(2).................. 44 Director

---------------
(1) Member of Audit Committee

(2) Member of Management Compensation Committee

Set forth below is biographical information for our executive officers and
directors listed above.

Robert G. Paul has been our President since December 1989 and our Chief
Executive Officer since February 1991 and has served as a director since March
1990. He was our Chief Operating Officer from December 1989 to February 1991,
Senior Vice President -- Finance from April 1987 to December 1989, Vice
President -- Finance from January 1987 to April 1987 and a Vice President from
1974 to January 1987. He also was President of the Antenna Specialists Company
from 1978 to June 1990. Mr. Paul joined us in 1970 as an Assistant to the
President and also served as Assistant Treasurer from 1970 to 1972. He was
elected our Treasurer in 1972 and Vice President and Treasurer in 1974. Mr. Paul
also is a Director of Rogers Corporation.

Robert A. Youdelman joined us in 1977 as Director of Taxes and was elected
Vice President -- Taxation in February 1980. In December 1989, he was elected
our Senior Vice President -- Finance, Chief Financial Officer and Assistant
Secretary and was promoted to Executive Vice President in February 1997. Mr.
Youdelman is an attorney.

Peter G. de Villiers joined us in July 1992 upon our acquisition of
Alliance Telecommunications Corporation, where he served as Vice
President -- Marketing and Sales from March 1991 to June 1993. Mr. de Villiers
served as Vice President -- Strategic Planning for a subsidiary of Allen Telecom
upon the merger of Alliance into the subsidiary in June 1993 until February
1997. In February 1997, he was elected Vice President.

James L. LePorte, III joined us in 1981 as Senior Financial Analyst. In
1983, he was appointed Manager of Financial Analysis and, in 1984, was named
Assistant Controller. Mr. LePorte was elected our Controller in April 1988,
elected a Vice President in December 1990, and served as our Treasurer from
September 1995 to February 1999. Mr. LePorte was elected Vice
President -- Finance in April 1999.

Laura C. Meagher joined us in 1999 as Corporate Counsel and was elected
Secretary and General Counsel in September 1999. Prior to joining us, Ms.
Meagher was an attorney with the law firm of Benesch, Friedlander, Coplan &
Aronoff LLP, Cleveland, Ohio, from September 1989 to August 1999.

Roger L. Schroeder joined us in 1981 as an Internal Auditor. In 1984, he
was appointed Manager of Financial Analysis. He was promoted to Director of
Financial Analysis in 1988 and named Director of Financial Analysis and
Insurance in 1993. Mr. Schroeder was elected Assistant Secretary in December
1992 and Assistant Treasurer in April 1997, and was promoted to Treasurer and
Assistant Secretary in February 1999.

Philip Wm. Colburn has been a director since April 1975 and has been
Chairman of the Board since December 1988 and a consultant to Allen Telecom
since December 1991. Mr. Colburn was also our Chief Executive Officer from March
1988 to February 1991 and President from March 1988 to December 1989. Mr.
Colburn was President, PWC Associates, management consulting, Los Angeles,
California, from June 1981 to March 1988. He had been our Executive Vice
President from February 1976 to June 1981 and thereafter until March 1988 was a
consultant to us. Mr. Colburn is also a director of Superior Industries
International, Inc. and TransPro, Inc.

J. Chisholm Lyons has been a director since October 1969. He has been
Counsel with the law firm Gowlings LaFleur Henderson LLP, barristers and
solicitors, Toronto, Canada, since September 2001, when that firm merged with
the Smith Lyons law firm, Toronto. Mr. Lyons was a partner of Smith Lyons for 31
years until May 1993 and counsel from that date to September 2001. Mr. Lyons has
been our Vice Chairman of the Board since September 1979. As Vice Chairman, he
was our employee from September 1979 to September 1989, and is presently a
consultant to us.

Sheldon I. Ausman has been a director since February 2002. Since December
2000 he has been a founding partner of Cambridge Capital Partners LLP, a private
equity firm with offices in Los Angeles, Chicago and New York. Mr. Ausman was
Managing Director -- Western Region of Valuation Research, Inc. from July 2000
until December 2001. Mr. Ausman was Vice Chairman of Compensation Resource
Group, Inc. (CRG), a national executive compensation and benefits consulting
firm from January 1998 until June 2000. Prior to joining CRG, Mr. Ausman served
as Senior Vice President and Director with the international financial printing
firm of Bowne of Los Angeles from November 1996 until January 1998. He also
served with Arthur Andersen & Co. for 34 years and was Managing Partner of the
firm's practice in Southern California, Honolulu and Las Vegas before his
retirement. Mr. Ausman is also a director of Superior Industries International.

John F. McNiff has been a director since June 1995 and has been a trustee
of the Haven Fund, a public mutual fund, since 1996. Mr. McNiff was Vice
President -- Finance and director of Dover Corporation, a manufacturer of
industrial products and equipment, from 1983 and 1996, respectively, until May
2000.

Charles W. Robinson has been a director since April 1979 and has been the
Chairman of Robinson & Associates Inc., a venture capital investment firm
located in Santa Fe, New Mexico, since January 1989. Mr. Robinson has also been
President of Dyna Yacht Inc., a sailboat designer located in San Diego,
California, since early 1991 and President of Mangia Onda Co., a power boat
designer, since early 1998. Mr. Robinson is also a director of Nike Inc.

Dr. Martyn F. Roetter has been a director since July 1998 and has been the
Vice President, Communications and Information Technology of Arthur D. Little,
Inc., a consulting firm located in Cambridge, Massachusetts, since February
1996. Mr. Roetter was the Vice President, Communications and Information
Technologies of Decision Resources, a consulting firm located in Waltham,
Massachusetts, from April 1992 to February 1996.

Gary B. Smith has been a director since February 1999 and has been the
President and founder of ColorID, LLC, an Internet based reseller company, since
June 1999 and a director and founder of WorkWireless.com, an Internet software
company, since October 1999. Mr. Smith also has been a Management Consultant in
Cornelius, North Carolina since December 1998. Mr. Smith has been on the
Advisory Board of Contec Innovations Inc., a wireless information technology
company, Vancouver, B.C., Canada since 2001. Mr. Smith was a director and the
President of Glenayre Technologies, Inc., a manufacturer of paging products and
systems located in Charlotte, North Carolina, from June 1996 to December 1998
and the Chief Executive Officer of Glenayre from January 1997 to December 1998.
Mr. Smith also served as the Executive Vice President and General Manager of
Glenayre's Wireless

Messaging Group from September 1994 to June 1996, and in various management
positions, including Chief Technology Officer, from 1983 to September 1994.

Kathleen M.H. Wallman has been a director since December 2000 and is the
President and Chief Executive Officer of Wallman Strategic Consulting LLC, a
provider of strategic advice in the areas of video, voice and data
communications and information technology. Ms. Wallman is also founder of and an
advisor to Critical Infrastructure Fund, L.P., which specializes in wireless
communications and infrastructure investments. Ms. Wallman is also a director of
Micromuse, Inc., a publicly traded network reliability software company. Ms.
Wallman has also served in a number of governmental positions relating to
telecommunications and technology matters, including senior staff positions at
the FCC.

There is no family relationship between any of our executive officers. All
of our officers hold office until the first meeting of directors following the
annual meeting of stockholders and until their successors have been elected and
qualified.

PRINCIPAL STOCKHOLDERS

The following table sets forth information regarding the beneficial owners
of more than 5.0% of the outstanding shares of our common stock as of December
31, 2001, at which date we had 30,417,859 shares of common stock outstanding.

NUMBER
NAME AND ADDRESS OF BENEFICIAL OWNERS OF SHARES PERCENT
------------------------------------- --------- -------

State of Wisconsin Investment Board......................... 5,523,000(a) 18.16%
P.O. Box 7842
Madison, Wisconsin 53707
Gabelli Funds, Inc. et al................................... 3,259,387(b) 10.72%
One Corporate Center
Rye, New York 10580
Mellon Financial Corporation................................ 2,993,946(c) 9.84%
One Mellon Center
500 Grant Street
Pittsburgh, Pennsylvania 15258
Bartley R.F. Systems Trust.................................. 2,271,391(d) 7.47%
93 Hilldale Avenue
South Hampton, New Hampshire 03827
David J. Greene and Company, LLC............................ 1,932,519(e) 6.35%
599 Lexington Avenue
New York, New York 10022

---------------
(a) Based on the Schedule 13G filed by the State of Wisconsin Investment Board
under the Exchange Act on February 11, 2002, the State of Wisconsin
Investment Board held sole dispositive power and sole voting power over all
of such shares as of February 15, 2002.

(b) Based on the Schedule 13D filed jointly by Mario J. Gabelli, Marc J. Gabelli
and various entities which either one directly or indirectly controls or for
which either one acts as chief investment officer under the Exchange Act on
May 11, 2001, (i) Gabelli Funds, LLC held sole dispositive power and sole
voting power over 947,000 of such shares, (ii) GAMCO Investors, Inc. held
sole dispositive power and sole voting power over 2,286,387 of such shares,
(iii) Gabelli Advisors, Inc. held sole dispositive power and sole voting
power over 10,000 of such shares and (iv) Gabelli International Limited held
sole dispositive power and sole voting power over 16,000 of such shares.

(c) Based on the Schedule 13G filed jointly by Mellon Financial Corporation, The
Boston Company, Inc. and The Boston Company Asset Management, LLC under the
Exchange Act on January 22, 2002, (i) Mellon Financial Corporation held sole
voting power over 2,518,991 of such shares, shared voting power over 345,100
of such shares, sole dispositive power over 2,993,846 of such shares and
shared dispositive power over 100 of such shares, (ii) The Boston Company,
Inc. held sole voting power over 2,085,300 of such shares, shared voting
power over 345,000 of such shares and sole dispositive power over 2,533,900
of such shares and (iii) The Boston Company Asset Management, LLC held sole
voting power over 1,483,500 of such shares, shared voting power over 345,000
of such shares and sole dispositive power over 1,932,100 of such shares.

(d) Based on the Schedule 13G filed jointly by Bartley R.F. Systems Trust,
Richard J. Bartley, Jr., Lucy M. Bartley and Stephanie J. Bartley under the
Exchange Act on January 8, 2002, (i) Bartley R.F. Systems Trust held sole
dispositive power and sole voting power over 2,271,391 of such shares, and
(ii) each of Richard J. Bartley, Jr., Lucy M. Bartley and Stephanie J.
Bartley held shared dispositive and shared voting power over 2,271,391 of
such shares.

(e) Based on the Form 13G filed by David J. Greene and Company, LLC under the
Exchange Act on February 14, 2002, David J. Greene and Company, LLC held
shared dispositive power over all of such shares, shared voting power over
1,485,670 of such shares and no voting power over 446,849 of such shares.

DESCRIPTION OF THE CONVERTIBLE PREFERRED STOCK

The following is a summary of certain provisions of the certificate of
designation for our Series D convertible preferred stock, which we refer to as
the convertible preferred stock. A copy of the certificate of designation for
the convertible preferred stock, which includes the form of convertible
preferred stock share certificate, is available upon request to our General
Counsel at our address set forth under "Incorporation of Certain Documents By
Reference." The following summary of the terms of the certificate of designation
does not purport to be complete and is subject to, and qualified in its entirety
by reference to, the provisions of the certificate of designation. As used in
this section, the terms "we," "us" and "our" refer to Allen Telecom Inc., and
not to any of its subsidiaries.

GENERAL

Under our second restated certificate of incorporation, our board of
directors is authorized, without further stockholder action, to issue up to
3,000,000 shares of preferred stock, without par value, in one or more series,
with such voting powers, full or limited, or without voting powers, and with
such designations, preferences and relative, participating, optional or other
special rights, qualifications, limitations or restrictions, as shall be set
forth in the resolutions providing for the issue of any such series of preferred
stock.

At the consummation of this offering, we will issue 1,000,000 shares of the
convertible preferred stock. In addition, we have granted the underwriters an
option to purchase up to 150,000 additional shares of the convertible preferred
stock to cover over-allotments.

We currently have no shares of preferred stock outstanding. Our board of
directors has also authorized the issuance of up to 500,000 shares of Series C
Junior Participating Preferred Stock in connection with the adoption of our
share purchase rights plan in January 1998. No shares of Series C Junior
Participating Preferred Stock are outstanding. See "Description of Certain
Indebtedness and Capital Stock -- Capital Stock."

When issued, the convertible preferred stock and any common stock issued
upon the conversion of the convertible preferred stock will be fully paid and
nonassessable. The holders of the convertible preferred stock will have no
preemptive or preferential right to purchase or subscribe to our capital stock,
obligations, warrants or any of our other securities of any class.

The transfer agent, registrar, redemption, conversion and dividend
disbursing agent for shares of the convertible preferred stock and any common
stock issued upon conversion thereof or as dividends in respect of the
convertible preferred stock will be Fifth Third Bank, 38 Fountain Square Plaza,
Cincinnati, Ohio 45263.

The convertible preferred stock will be subject to mandatory conversion, as
described below under "-- Mandatory Conversion," and mandatory redemption, as
described below under "-- Mandatory Redemption."

RANKING; AMENDMENTS

The convertible preferred stock will, with respect to dividend rights and
rights upon our liquidation, winding-up or dissolution, rank:

- senior to our common stock and to the Series C Junior Participating
Preferred Stock and each other class of capital stock or series of
preferred stock established by our board of directors after the original
issue date of the convertible preferred stock (the "Issue Date"), the
terms of which do not expressly provide that such class or series ranks
senior to or on parity with the convertible preferred stock as to
dividend rights or rights upon our liquidation, winding-up or dissolution
(collectively referred to as "Junior Stock");

- on parity with any class of capital stock or series of preferred stock
established by our board of directors after the Issue Date, the terms of
which expressly provide that such class or series will

rank on parity with the convertible preferred stock as to dividend rights
or rights upon our liquidation, winding-up or dissolution (collectively
referred to as "Parity Stock"); and

- junior to each class of capital stock or series of preferred stock
established after the Issue Date by our board of directors, the terms of
which expressly provide that such class or series will rank senior to the
convertible preferred stock as to dividend rights or rights upon our
liquidation, winding-up or dissolution (collectively referred to as
"Senior Stock").

So long as any shares of convertible preferred stock remain outstanding, we
may not authorize, increase the authorized amount of or issue any shares of any
class or series of Senior Stock (or any security convertible into or
exchangeable or exercisable for Senior Stock), or adopt amendments to our
certificate of incorporation (which includes the certificate of designation for
the convertible preferred stock) or by-laws that would materially affect the
existing terms of the convertible preferred stock, without the affirmative vote
or consent of the holders of at least 66 2/3% of the outstanding shares of
convertible preferred stock. The certificate of designation will provide that,
except as otherwise required by law, the authorization of, the increase in the
authorized amount of or the issuance of any class or series of Parity Stock or
Junior Stock does not require the consent of any holder of convertible preferred
stock and is not deemed to materially affect the existing terms of the
convertible preferred stock as to dividend rights or rights upon liquidation or
otherwise. See "-- Voting Rights."

DIVIDENDS

Subject to the rights of any holders of Senior Stock or Parity Stock,
holders of shares of convertible preferred stock will be entitled to receive,
when, as and if declared by our board of directors out of our assets legally
available therefor, dividends at the annual rate of % of the liquidation
preference of $50.00 per share of convertible preferred stock. This is
equivalent to $ per share annually.

Dividends on the convertible preferred stock will be payable quarterly in
arrears, on February 15, May 15, August 15 and November 15 of each year,
commencing 15, 2002 (each, a "Dividend Payment Date"). Dividends will
be payable from the most recent Dividend Payment Date or, in the case of the
dividend payable on 15, 2002, from the Issue Date. Dividends payable on
the convertible preferred stock for any period less than a full quarterly
dividend period will be computed on the basis of a 360-day year consisting of
twelve 30-day months. We refer to each period for which a dividend is payable as
a dividend period.

Each dividend will be payable to holders of record as they appear on our
stock records at the close of business on the 15th day prior to the relevant
Dividend Payment Date, or such other record date designated by our board of
directors with respect to the relevant Dividend Payment Date (the "Record
Date"). If a partial dividend is declared with respect to any dividend period,
it will be distributed on a pro rata basis with respect to the outstanding
shares of the convertible preferred stock.

At our option, any dividend on the convertible preferred stock will be
payable:

- in cash;

- in shares of our common stock; or

- in a combination of cash and shares of our common stock.

If we elect to pay any portion of a dividend in shares of our common stock:

- we will give notice of our election by issuing a press release for
publication on the PR Newswire or an equivalent newswire service, if
required by and in accordance with the federal securities laws or the
rules of any stock exchange on which the convertible preferred stock or
our common stock is listed or traded, and by mail or publication (with
subsequent prompt notice by mail) to each holder of the convertible
preferred stock at least ten days in advance of the Record Date for the
relevant Dividend Payment Date; and

- the number of shares of common stock to be issued as a dividend on the
applicable Dividend Payment Date per share of convertible preferred stock
will be determined by dividing the difference between the total declared
dividend amount per share of the convertible preferred stock ($ , in
the case of a full quarterly dividend) and the amount of the cash
dividend, if any, to be paid with respect to each share of convertible
preferred stock, by the product of (x) 95% and (y) the average closing
price of a share of our common stock as reported on the New York Stock
Exchange (or such other national securities exchange or automated
quotation system on which our common stock is then listed or authorized
for quotation or, if not so listed or authorized for quotation, an amount
determined in good faith by our board of directors to be the fair value
of the common stock) for the ten consecutive trading day period ending on
and including the fifth trading day before that Dividend Payment Date.

If our board of directors does not declare a dividend, declares a partial
dividend or we fail to pay a dividend declared by our board for any dividend
period, you will not be entitled to receive the undeclared or unpaid dividend
amount and that amount will not accumulate, but the conversion ratio per share
of convertible preferred stock described below under "-- Conversion Rights;
Conversion Ratio" shall automatically increase on the dividend payment date on
which such undeclared or unpaid dividend amount would have been paid by 115% of
the number of shares of common stock that we would have been required to issue
as a stock dividend on each share of convertible preferred stock to pay the
undeclared or unpaid dividend amount for that dividend period in full. This
adjustment to the conversion ratio shall be deemed to fully satisfy in all
respects our payment of the undeclared or unpaid dividend amount for such
dividend period.

Automatic increases in the conversion ratio will occur each time our board
does not declare a dividend, declares a partial dividend or we fail to pay a
dividend declared by our board for a dividend period, and such conversion ratio
increases will accumulate until such time as the shares of convertible preferred
stock are redeemed for cash or converted or until such time as we make a
distribution of our assets with respect to your shares of convertible preferred
stock upon our liquidation, winding up or dissolution. You will not be entitled
to receive any additional amount in respect of undeclared or unpaid dividends if
you do not convert your shares of convertible preferred stock into shares of our
common stock before a mandatory redemption of the convertible preferred stock
occurs or before our liquidation, winding up or dissolution. We will furnish you
written notice of any automatic increase in the conversion ratio as described
below under "-- Conversion Rights; Conversion Ratio."

In the event we enter into a Change of Control transaction described in the
second bullet point of the definition of "Change of Control" under "-- Change of
Control," and if dividends become subject to foreign withholding taxes, then
such dividends will be increased such that the net amount payable after
withholding taxes will be equivalent to the dividend that the holder would have
received absent such withholding taxes.

The transfer agent will be authorized and directed in the certificate of
designation to:

- aggregate any fractional shares of our common stock that would otherwise
be distributable as dividends;

- sell them at the best available price; and

- distribute the proceeds to the holders of the convertible preferred stock
in proportion to their respective interests.

We will reimburse the transfer agent for expenses incurred with respect to
any sale of the aggregated fractional shares, including brokerage commissions.
If the sale by the transfer agent of the aggregated fractional interests would
be restricted, we will agree with the transfer agent on other appropriate
arrangements for the cash realization of fractional shares of our common stock.

All shares of common stock distributed on any Dividend Payment Date in
payment of dividends on the convertible preferred stock will be freely
transferable without restriction under the Securities Act.

We will not declare, pay or set apart any sum for the payment of any
dividend or other distribution in respect of any Parity Stock or Junior Stock,
unless our board of directors has declared, and we have not failed to pay, a
dividend on the convertible preferred stock in the full amount payable with
respect to the dividend period in which such payment of a dividend or other
distribution in respect of any Parity Stock or Junior Stock would occur.

Notwithstanding anything herein to the contrary, we may:

- declare and pay dividends on Parity Stock which are payable solely in
shares of Parity Stock or Junior Stock;

- declare and pay dividends on Junior Stock which are payable solely in
shares of Junior Stock;

- declare and pay dividends on Parity Stock or Junior Stock by increasing
the liquidation value of the Parity Stock or Junior Stock, as applicable;

- repurchase, redeem or otherwise acquire Junior Stock in exchange for
Junior Stock; or

- repurchase, redeem or otherwise acquire Parity Stock in exchange for
Parity Stock or Junior Stock.

Our ability to declare and pay cash dividends and make other distributions
with respect to our capital stock, including the convertible preferred stock, is
limited by the terms of our outstanding indebtedness. In addition, our ability
to declare and pay dividends may be limited by applicable Delaware law. See
"Risk Factors -- Risks Relating to This Offering -- We may be restricted from
paying dividends on the convertible preferred stock or, in the event our board
does not declare or we do not pay a dividend, we may be restricted from
increasing the conversion ratio."

MANDATORY REDEMPTION

On but not before February , 2014 (the "Mandatory Redemption Date"),
subject to legal availability of funds therefor, we will be required to redeem
all outstanding shares of convertible preferred stock at a redemption price in
cash equal to the liquidation preference of the convertible preferred stock. You
will not be entitled to receive any additional amount per share in excess of the
liquidation preference to compensate you for any accumulated increases in the
conversion ratio in respect of undeclared or unpaid dividends through the
Mandatory Redemption Date. The certificate of designation for the convertible
preferred stock will provide that we will take all actions required or permitted
under Delaware law to permit the redemption.

Your option to convert shares of convertible preferred stock into common
stock will terminate at the close of business on the business day preceding the
Mandatory Redemption Date, unless we default in making payment of any cash
payable upon mandatory redemption.

We will give you notice of the mandatory redemption:

- by issuing a press release for publication on the PR Newswire or an
equivalent newswire service, if required by and in accordance with the
federal securities laws or the rules of any stock exchange on which the
convertible preferred stock or our common stock is listed or traded; and

- by mail or publication (with subsequent prompt notice by mail), at least
15 days in advance of the Mandatory Redemption Date.

In addition to any information required by applicable law or regulation,
the press release and notice of mandatory redemption shall state, as
appropriate:

- the Mandatory Redemption Date;

- the total number of shares of convertible preferred stock to be
mandatorily redeemed;

- that each outstanding share of convertible preferred stock will be
redeemed for an amount in cash equal to the liquidation preference,
$50.00;

- that dividends on the convertible preferred stock to be mandatorily
redeemed will cease to be payable on the Mandatory Redemption Date,
unless we default in making payment of any cash payable upon mandatory
redemption;

- that your option to convert shares of convertible preferred stock into
common stock will terminate at the close of business on the business day
preceding the Mandatory Redemption Date, unless we default in making
payment of any cash payable upon mandatory redemption;

- the conversion ratio then in effect; and

- that you must surrender any convertible preferred stock certificates to
us or the Transfer Agent.

LIQUIDATION PREFERENCE

In the event of our voluntary or involuntary liquidation, winding-up or
dissolution, each holder of convertible preferred stock will, subject to the
prior rights of any holders of Senior Stock, be entitled to receive and to be
paid out of our assets available for distribution to our stockholders, before
any payment or distribution is made to holders of Junior Stock (including common
stock), a liquidation preference in the amount of $50.00 per share of
convertible preferred stock. You will not be entitled to receive any additional
amount per share in excess of the liquidation preference to compensate you for
any accumulated increases in the conversion ratio in respect of undeclared or
unpaid dividends through the date of liquidation.

If, upon our voluntary or involuntary liquidation, winding-up or
dissolution, the amounts payable with respect to the liquidation preference of
the convertible preferred stock are not paid in full, the holders of the
convertible preferred stock and any Parity Stock on parity with the convertible
preferred stock with respect to rights upon liquidation, winding-up or
dissolution will share equally and ratably in any distribution of our assets in
proportion to the full liquidation preference and, if applicable in the case of
holders of such Parity Stock, accumulated and unpaid dividends to which they are
entitled. After payment of the full amount of the liquidation preference to
which they are entitled, the holders of the convertible preferred stock will
have no right or claim to any of our remaining assets. Neither the sale of all
or substantially all of our assets or business (other than in connection with
the liquidation, winding-up or dissolution of our business), nor our merger or
consolidation into or with any other person, will be deemed to be a voluntary or
involuntary liquidation, winding-up or dissolution.

The certificate of designation will not contain any provision requiring
funds to be set aside to protect the liquidation preference of the convertible
preferred stock, which has no par value.

VOTING RIGHTS

The shares of convertible preferred stock have no voting rights except as
described below and otherwise required by Delaware law from time to time.

So long as any shares of convertible preferred stock remain outstanding, we
may not authorize, increase the authorized amount of or issue any shares of any
class or series of Senior Stock (or any security convertible into Senior Stock),
or adopt amendments to our certificate of incorporation (which includes the
certificate of designation for the convertible preferred stock) or by-laws that
would materially affect the existing terms of the convertible preferred stock,
without the affirmative vote or consent of the holders of at least 66 2/3% of
the outstanding shares of convertible preferred stock. The certificate of
designation will provide that, except as otherwise required by law, the
authorization of, the increase in the authorized amount of or the issuance of
any shares of any class or series of Parity Stock or Junior Stock does not
require the consent of any holder of convertible preferred stock, and is not
deemed to materially adversely affect the existing terms of the convertible
preferred stock.

So long as at least 100,000 shares of the convertible preferred stock
remain outstanding, if, for each of six consecutive dividend periods, we fail to
pay the full dividend payable to the holders of the convertible preferred stock
with respect to such dividend period in cash, in shares of our common stock or a

combination thereof, then the holders of the convertible preferred stock, voting
separately as one class, will be entitled at our next regular or special meeting
of stockholders to elect one additional director to our board of directors. Upon
the election of this additional director, the number of directors that compose
our board of directors will be increased by one director. Such voting rights and
the term of any director so elected will continue until such time as fewer than
100,000 shares of the convertible preferred stock are outstanding, such time as
the outstanding shares of convertible preferred stock have been mandatorily
converted or redeemed, or our liquidation, winding-up or dissolution, whichever
is earliest.

In all cases in which the holders of convertible preferred stock are
entitled to vote, each share of convertible preferred stock shall be entitled to
one vote.

CONVERSION RIGHTS; CONVERSION RATIO

Each share of convertible preferred stock will be convertible at your
option at any time into:

- shares of our common stock, which is calculated by dividing the
liquidation preference per share of the convertible preferred stock,
$50.00, by the conversion price, which is initially $ per share of
common stock; plus

- cash in lieu of any fractional share. See "-- Fractional Shares."

The initial conversion price is subject to adjustment as described below
under "-- Conversion Price Adjustment" (such price or adjusted price being
referred to as the "Conversion Price").

We refer to the number of shares of common stock into which each share of
convertible preferred stock may be converted at any time, based upon the
Conversion Price, as the conversion ratio. The conversion ratio will
automatically increase if our board does not declare a dividend, declares a
partial dividend or we fail to pay a dividend declared by our board for any
dividend period, as described above under "-- Dividends."

We will give you notice of any automatic increase in the conversion ratio:

- by mail or publication (with subsequent prompt notice by mail), at least
ten days in advance of the Record Date for the relevant Dividend Payment
Date, in the event that our board of directors does not declare a
dividend for any quarterly dividend period, or no more than three days
after the relevant Dividend Payment Date, in the event that we fail to
pay a dividend declared by our board for any quarterly dividend period.

All shares of common stock distributed upon conversion of the convertible
preferred stock will be freely transferable without restriction under the
Securities Act.

If a dividend is declared by our board of directors for any dividend
period, the holders of shares of convertible preferred stock at the close of
business on a Record Date will be entitled to receive the dividend payment on
those shares on the corresponding Dividend Payment Date notwithstanding the
conversion of such shares following that Record Date, unless we default in
payment of the dividend due on that Dividend Payment Date, in which case such
holders shall be issued on the Dividend Payment Date, in addition to the shares
of common stock issued on the conversion date, an additional number of shares of
common stock per converted share of convertible preferred stock equal to the
automatic increase in the conversion ratio described under "-- Dividends."
However, shares of convertible preferred stock surrendered for conversion during
the period between the close of business on any Record Date and the close of
business on the business day immediately preceding the applicable Dividend
Payment Date must

be accompanied by payment of an amount in cash equal to the cash dividend
payable on such shares on that Dividend Payment Date, or, if the dividend
payable on that Dividend Payment Date is payable in common stock in whole or in
part, an amount of cash equal to the cash dividend amount that would have been
payable on that Dividend Payment Date if we had elected to pay that dividend
solely in cash. A holder of shares of convertible preferred stock on a Record
Date who (or whose transferee) tenders any shares for conversion on the
corresponding Dividend Payment Date will receive any dividend payable by us on
the convertible preferred stock on that date, and the converting holder need not
include payment in the amount of such dividend upon surrender of shares of
convertible preferred stock for conversion.

MANDATORY CONVERSION

At any time on or after February , 2005, we may, at our option, cause
all, but not a portion, of the outstanding shares of convertible preferred stock
to be automatically converted into that number of shares of common stock for
each share of convertible preferred stock equal to the then prevailing
conversion ratio, plus cash in lieu of any fractional shares. We may exercise
this right to cause a mandatory conversion only if the closing price of our
common stock as reported on the New York Stock Exchange (or such other national
securities exchange or automated quotation system on which the common stock is
then listed or authorized for quotation or, if not so listed or authorized for
quotation, an amount determined in good faith by our board of directors to be
the fair value of the common stock) equals or exceeds 125% of the then
prevailing Conversion Price for at least 20 trading days in any consecutive
30-day trading period, including the last trading day of such 30-day period,
ending on the trading day prior to our issuance of a press release, or, if no
press release is issued, mailing of a notice announcing the mandatory conversion
as described below.

To exercise the mandatory conversion right described above, if required by
the federal securities laws or the rules of any stock exchange on which the
convertible preferred stock or our common stock is listed or traded, we must
issue a press release for publication on the PR Newswire or an equivalent
newswire service prior to the opening of business on the first trading day
following any date on which the conditions described in the preceding paragraph
are met, announcing such a mandatory conversion. Whether or not a press release
is issued, we will give notice by mail or by publication (with subsequent prompt
notice by mail) to the holders of the convertible preferred stock not later than
the 15th day prior to the date on which the mandatory conversion will occur (the
"Mandatory Conversion Date"), announcing our intention to mandatorily convert
the convertible preferred stock. The Mandatory Conversion Date will be a date
that we select and will be at least 15 days but not more than 30 days after the
date on which we issue such press release, or if no press release is issued,
mail such notice.

In addition to any information required by applicable law or regulation,
the press release and notice of a mandatory conversion shall state, as
appropriate:

- the Mandatory Conversion Date;

- the number of shares of common stock to be issued upon the mandatory
conversion of each share of convertible preferred stock;

- the number of shares of convertible preferred stock to be converted; and

- that dividends on the convertible preferred stock to be converted will
cease to be payable on the Mandatory Conversion Date.

On and after the Mandatory Conversion Date, dividends will cease to be
payable on the convertible preferred stock called for a mandatory conversion and
all rights of holders of such convertible preferred stock will terminate except
for the right to receive the shares of common stock issuable upon conversion
thereof and cash in lieu of any fractional share of our common stock. Any
dividend payment declared by our board of directors with respect to the
convertible preferred stock called for a mandatory conversion on a date during
the period between the close of business on any Record Date for the payment of
dividends to the close of business on the corresponding Dividend Payment Date
will be payable on such Dividend

Payment Date to the record holder of such share on such Record Date if such
share has been converted after such Record Date and prior to such Dividend
Payment Date.

In addition to the mandatory conversion provision described above, if there
are less than 100,000 shares of convertible preferred stock outstanding, we may,
at any time on or after February , 2006, at our option, cause each outstanding
share of convertible preferred stock to be automatically converted into the
lesser of:

- the number of shares of common stock equal to the then prevailing
conversion ratio; and

- the number of shares of common stock equal to the liquidation preference,
$50.00, divided by the Market Value (as defined in "-- Conversion Price
Adjustment") for the period ending on the second trading day immediately
prior to the Mandatory Conversion Date, plus the aggregate number of
shares of common stock by which the conversion ratio has been increased
in respect of undeclared or unpaid dividends through the Mandatory
Conversion Date.

The provisions of the second and fourth paragraphs of this subsection
entitled "-- Mandatory Conversion" shall also apply to any mandatory conversion
pursuant to the preceding paragraph. In addition to any information required by
applicable law or regulation, the press release and notice of such a mandatory
conversion shall state, as appropriate:

- the Mandatory Conversion Date;

- the number of shares of convertible preferred stock to be converted;

- that dividends on the convertible preferred stock to be converted will
cease to be payable on the Mandatory Conversion Date;

- the then prevailing conversion ratio; and

- that the number of shares of common stock to be issued upon conversion of
each share of convertible stock shall be equal to the lesser of the
prevailing conversion ratio and the liquidation preference, $50.00,
divided by the Market Value for the period ending on the second trading
day immediately prior to the Mandatory Conversion Date, plus the
aggregate number of shares of common stock by which the conversion ratio
has been increased in respect of undeclared and unpaid dividends through
the Mandatory Conversion Date.

FRACTIONAL SHARES

No fractional shares of common stock or securities representing fractional
shares of common stock will be issued upon conversion, whether voluntary or
mandatory. Any fractional share of common stock resulting from conversion will
be paid in cash based on the last reported sale price of the common stock on the
New York Stock Exchange (or such other national securities exchange or automated
quotation system on which the common stock is then listed or authorized for
quotation or, if not so listed or authorized for quotation, an amount determined
in good faith by our board of directors to be the fair value of the common
stock) at the close of business on the trading day next preceding the date of
conversion.

Fractional shares of common stock that may be distributed as dividends will
be aggregated and sold at the best available price by the transfer agent, and
the proceeds of the sale will be distributed to the holders of the convertible
preferred stock in proportion to their respective interests, as described above
under "-- Dividends."

CONVERSION PRICE ADJUSTMENT

The Conversion Price is subject to adjustment, in accordance with formulas
that will be set forth in the certificate of designation, in certain events,
including upon:

- any payment of a dividend (or other distribution) payable in shares of
common stock on any class of our capital stock (other than the issuance
of shares of common stock in connection with the

payment in conversion of convertible preferred stock or dividends in respect of
the convertible preferred stock or any Parity Stock);

- any issuance to all holders of shares of common stock of rights, options
or warrants entitling them to subscribe for or purchase shares of common
stock or securities convertible into or exchangeable for shares of common
stock at less than the Market Value for the period ending on the date of
issuance; provided, however, that no adjustment shall be made with
respect to such a distribution if the holder of shares of convertible
preferred stock would be entitled to receive such rights, options or
warrants upon conversion at any time of shares of convertible preferred
stock into common stock; and provided further, however, that if such
rights, options or warrants are only exercisable upon the occurrence of
certain triggering events, then the Conversion Price will not be adjusted
until such triggering events occur;

- any subdivision, combination or reclassification of the common stock;

- any dividend or distribution to all holders of shares of common stock
(other than a dividend or distribution referred to in the second
bullet-pointed clause above) made pursuant to any shareholder rights
plan, "poison pill" or similar arrangement;

- any distribution consisting exclusively of cash (excluding any cash
portion of distributions referred to in the immediately preceding
bullet-pointed clause above, or cash distributed upon a merger or
consolidation to which the final paragraph of this subsection entitled
"Conversion Price Adjustment" applies) to all holders of shares of common
stock in an aggregate amount that, combined together with (i) all other
such all-cash distributions made within the then-preceding 12 months in
respect of which no adjustment has been made and (ii) any cash and the
fair market value of other consideration paid or payable in respect of
any tender offer by us or any of our subsidiaries for shares of common
stock concluded within the then-preceding 12 months in respect of which
no adjustment has been made, exceeds 10% of our market capitalization
(defined as the product of the Market Value for the period ending on the
record date of such distribution times the number of shares of common
stock then outstanding) on the record date of such distribution;

- the completion of a tender or exchange offer made by us or any of our
subsidiaries for shares of common stock that involves an aggregate
consideration that, together with (i) any cash and other consideration
payable in a tender or exchange offer by us or any of our subsidiaries
for shares of common stock expiring within the then-preceding 12 months
in respect of which no adjustment has been made and (ii) the aggregate
amount of any such all-cash distributions referred to in the immediately
preceding bullet-pointed clause to all holders of shares of common stock
within the then-preceding 12 months in respect of which no adjustments
have been made, exceeds 10% of our market capitalization on the
expiration of such tender offer; or

- a distribution to all holders of common stock consisting of evidences of
indebtedness, shares of capital stock other than common stock or assets
(including securities, but excluding those dividends, rights, options,
warrants and distributions referred to above).

The adjustment referred to in the sixth bullet point above will only be
made if the cash and value of any other consideration included in such payment
per share of common stock exceeds the current market price per share of common
stock on the business day next succeeding the last date on which tenders or
exchanges may be made pursuant to such tender or exchange by 5% or more. No
adjustment of the Conversion Price will be required to be made until the
cumulative adjustments not made, amount to 1% or more of the Conversion Price as
last adjusted. We reserve the right to make such reductions in the Conversion
Price, in addition to those required in the foregoing provisions, as we consider
to be advisable in order that any event treated for federal income tax purposes
as a dividend of stock or stock rights will not be taxable to the recipients. In
the event we elect to make such a reduction in the Conversion Price, we will
comply with the requirements of securities laws and regulations thereunder if
and to the extent that such laws and regulations are applicable in connection
with the reduction of the Conversion Price.

The term "Market Value" means the average closing price of the common stock
for a five consecutive trading day period on the New York Stock Exchange (or
such other national securities exchange or automated quotation system on which
the common stock is then listed or authorized for quotation or, if not so listed
or authorized for quotation, an amount determined in good faith by our board of
directors to be the fair value of the common stock).

In the event that we distribute rights or warrants (other than those
referred to in the second bullet point in this subsection entitled
"-- Conversion Price Adjustment") pro rata to holders of shares of common stock,
so long as any such rights or warrants have not expired or been redeemed by us,
the holder of any convertible preferred stock surrendered for conversion will be
entitled to receive upon such conversion, in addition to the shares of common
stock then issuable upon such conversion (the "Conversion Shares"), a number of
rights or warrants to be determined as follows:

- if such conversion occurs on or prior to the date for the distribution to
the holders of rights or warrants of separate certificates evidencing
such rights or warrants (the "Distribution Date"), the same number of
rights or warrants to which a holder of a number of shares of common
stock equal to the number of Conversion Shares is entitled at the time of
such conversion in accordance with the terms and provisions applicable to
the rights or warrants; and

- if such conversion occurs after such Distribution Date, the same number
of rights or warrants to which a holder of the number of shares of common
stock into which such convertible preferred stock was convertible
immediately prior to such Distribution Date would have been entitled on
such Distribution Date had such convertible preferred stock been
converted immediately prior to such Distribution Date in accordance with
the terms and provisions applicable to the rights or warrants.

The Conversion Price will not be subject to adjustment on account of any
declaration, distribution or exercise of such rights or warrants.

Subject to the provisions under "-- Change of Control" and
"-- Consolidation, Merger and Sale of Assets," following our reclassification,
consolidation or merger with or into another person or any merger of another
person with or into us (with certain exceptions), or any sale or other
disposition of all or substantially all of our assets (computed on a
consolidated basis), each share of convertible preferred stock then outstanding
will, without the consent of any holder of convertible preferred stock, be
convertible at any time at the option of the holder thereof only into the kind
and amount of securities, cash and other property receivable upon such
reclassification, consolidation, merger, sale or other disposition by a holder
of the number of shares of common stock into which such convertible preferred
stock was convertible immediately prior thereto, after giving effect to any
adjustment event, including an adjustment upon a Change of Control, if
applicable.

Any adjustment to the Conversion Price will result in a change in the
conversion ratio.

CHANGE OF CONTROL

Except as provided below, upon a Change of Control (as defined below),
holders of convertible preferred stock shall, in the event that the liquidation
preference, $50.00, divided by the Market Value at such time plus the aggregate
number of shares of common stock by which the conversion ratio has been
increased in respect of undeclared or unpaid dividends is greater than the
conversion ratio, have a one-time option to convert each of their outstanding
shares of convertible preferred stock into a number of shares of common stock
equal to the liquidation preference, $50.00, divided by an adjusted Conversion
Price equal to the greater of:

- the Market Value (as defined above under "-- Conversion Price
Adjustment") as of the Change of Control date; and

- $ , which is 66 2/3% of the recent common stock price set forth on
the cover of this prospectus,

plus, in either case, the aggregate number of shares of common stock by which
the conversion ratio has been increased in respect of undeclared or unpaid
dividends through the change of control date.
68

This option shall be exercisable during a period of not less than 30 days
nor more than 60 days commencing on the third business day after notice of the
Change of Control is given by us in the manner that will be specified in the
certificate of designation, provided, however, that in the case of a transaction
described in the second bullet point under the definition of "Change of Control"
below that is for the purpose of changing our domicile to a location outside of
the United States, this option shall be exercisable for a 15 day period prior to
the Change of Control commencing upon our delivery of a notice to the holders of
the convertible preferred stock as described in the certificate of designation.
In such event, the applicable Market Value shall be determined for the period
ending two trading days before the mailing of such notice.

In lieu of converting the convertible preferred stock into shares of common
stock in the event of a Change of Control, we may, at our option, redeem each
share of convertible preferred stock for cash equal to the Market Value
determined for the period ending on the Change of Control date multiplied by the
number of shares of common stock that would be issuable upon conversion of each
share of convertible preferred stock as described in the first paragraph of this
subsection entitled "-- Change of Control."

Notwithstanding the foregoing, upon a Change of Control in which (x) each
holder of our common stock receives consideration consisting solely of common
stock of the successor, acquiror or other third party (and cash paid in lieu of
fractional shares) that is listed on a national securities exchange or quoted on
the Nasdaq National Market and (y) all of our common stock has been exchanged
for, converted into or acquired for common stock of the successor, acquiror or
other third party (and cash in lieu of fractional shares), and the convertible
preferred stock becomes convertible solely into such common stock, the
Conversion Price will not be adjusted as described in the first paragraph of
this subsection entitled "Change of Control."

"Change of Control" will be defined in the certificate of designation as
any of the following events:

- the sale, lease or transfer, in one or a series of related transactions,
of all or substantially all of our assets (determined on a consolidated
basis) to any person or group (as such term is used in Section 13(d)(3)
of the Exchange Act);

- our consolidation with or merger into any other person or conveyance,
transfer or lease of all or substantially all our assets to any person or
the consolidation with or merger into us by any other person or transfer
or lease of all or substantially all of any other person's assets to us,
if the surviving company, successor, transferee or lessee is not organized
under the laws of the United States or any political subdivision thereof;

- the adoption of a plan the consummation of which would result in our
liquidation or dissolution;

- the acquisition, directly or indirectly, by any person or group (as such
term is used in Section 13(d)(3) of the Exchange Act), of beneficial
ownership (as defined in Rule 13d-3 under the Exchange Act) of more than
50% of the aggregate voting power of our voting stock; or

- during any period of two consecutive years, individuals who at the
beginning of such period composed our board of directors (together with
any new directors whose election by such board of directors or whose
nomination for election by our stockholders was approved by a vote of
66 2/3% of our directors then still in office who were either directors
at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of our board of directors then in office.

The phrase "all or substantially all" of our assets is likely to be
interpreted by reference to applicable state law at the relevant time, and will
be dependent on the facts and circumstances existing at such time. As a result,
there may be a degree of uncertainty in ascertaining whether a sale or transfer
is of "all or substantially all" of our assets.

CONSOLIDATION, MERGER AND SALE OF ASSETS

The certificate of designation will provide that we may, without the
consent of any holder of the outstanding convertible preferred stock,
consolidate with or merge into any other person or convey, transfer or lease all
or substantially all of our assets to any person or permit any person to
consolidate with or merge into, or transfer or lease all or substantially all
its properties to us; provided, however, that:

- the shares of convertible preferred stock will become shares of such
successor, transferee or lessee, having in respect of such successor,
transferee or lessee the same powers, preferences and relative
participating, optional or other special rights and the qualification,
limitations or restrictions thereon, the convertible preferred stock had
immediately prior to such transaction; and

- we deliver to the transfer agent an officers' certificate and an opinion
of counsel stating that such transaction complies with the certificate of
designation.

Upon our consolidation with, or merger into, any other person or any
conveyance, transfer or lease of all or substantially all our assets as
described in the preceding paragraph, the successor resulting from such
consolidation or into which we are merged or the transferee or lessee to which
such conveyance, transfer or lease is made, will succeed to, and be substituted
for, and may exercise every right and power of ours under the shares of
convertible preferred stock, and thereafter, except in the case of a lease, the
predecessor (if still in existence) will be released from its obligations and
covenants with respect to the convertible preferred stock.

SEC REPORTS

Whether or not we are required to file reports with the SEC, if any shares
of convertible preferred stock are outstanding, we shall file with the SEC all
such reports and other information as we would be required to file with the SEC
by Sections 13(a) or 15(d) under the Exchange Act. See "Where You Can Find More
Information." We will supply each holder of convertible preferred stock, upon
request to our General Counsel at our address set forth under "Incorporation of
Certain Documents By Reference," at no charge, copies of such reports or other
information.

BOOK-ENTRY, DELIVERY AND FORM

The Depository Trust Company, or DTC, will act as securities depositary for
our convertible preferred stock. Our convertible preferred stock will be issued
only as fully-registered securities registered in the name of Cede & Co., the
depositary's nominee. One or more fully-registered global security certificates,
representing the total aggregate number of shares of our convertible preferred
stock, will be issued and deposited with the depositary and will bear a legend
regarding the restrictions on exchanges and registration of transfer referred to
below.

The laws of some jurisdictions require that some purchasers of securities
take physical delivery of securities in definitive form. Those laws may impair
the ability to transfer beneficial interests in our convertible preferred stock
so long the shares of our convertible preferred stock are represented by global
security certificates.

The depositary is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act.

The depositary holds securities that its participants deposit with the
depositary. The depositary also facilitates the settlement among participants of
securities transactions, including transfers and pledges, in deposited
securities through electronic computerized book-entry changes in participants'
accounts, thus eliminating the need for physical movement of securities
certificates. Direct participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations. The
depositary is owned by a number of its direct participants and by the NYSE, the
American Stock

Exchange, Inc., and the National Association of Securities Dealers, Inc.,
collectively referred to as participants. Access to the depositary system is
also available to others, including securities brokers and dealers, bank and
trust companies that clear transactions through or maintain a direct or indirect
custodial relationship with a direct participant either directly or indirectly,
collectively referred to as indirect participants. The rules applicable to the
depositary and its participants are on file with the SEC.

No convertible preferred stock represented by global security certificates
may be exchanged in whole or in part for our convertible preferred stock
registered, and no transfer of global security certificates will be made in
whole or in part for our convertible preferred stock registered, and no transfer
of global security certificates in whole or in part may be registered, in the
name of any person other than the depositary or any nominee of the depositary,
unless, however, the depositary has notified us that it is unwilling or unable
to continue as depositary for the global security certificates, has ceased to be
qualified to act or there is a continuing default by us in respect of our
obligations under our convertible preferred stock, the certificate of
designation or any other principal agreements or instruments executed in
connection with this offering. All shares of our convertible preferred stock
represented by one or more global security certificates or any portion of them
will be registered in those names as the depositary may direct.

As long as the depositary or its nominee is the registered owner of the
global security certificates, the depositary or that nominee will be considered
the sole owner and holder of the global security certificates and all of our
convertible preferred stock represented by those certificates for all purposes
under our convertible preferred stock. Except in the limited circumstances
referred to above, owners of beneficial interest in global security certificates
will not be entitled to have the global security certificates or shares of our
convertible preferred stock represented by those certificates registered in
their names, will not receive or be entitled to receive physical delivery of our
convertible preferred stock certificates in exchange and will not be considered
to be owners or holders of the global security certificates or any of our
convertible preferred stock represented by those certificates for any purpose
under our convertible preferred stock. All payments on our convertible preferred
stock represented by the global security certificates and all related transfers
and deliveries of common stock will be made to the depositary or its nominee as
their holder.

Ownership of beneficial interests in the global security certificates will
be limited to participants or persons that may hold beneficial interests through
institutions that have accounts with the depositary or its nominee. Ownership of
beneficial interests in global security certificates will be shown only on, and
the transfer of those ownership interests will be effected only through, records
maintained by the depositary or its nominee with respect to participants'
interests or by the participant with respect to interests of persons held by the
participants on their behalf.

Procedures for conversion or redemption of the convertible preferred stock
will be governed by arrangements among the depositary, participants and persons
that may hold beneficial interests through participants designed to permit the
settlement without the physical movement of certificates. Payments, transfers,
deliveries, exchanges and other matters relating to beneficial interests in
global security certificates may be subject to various policies and procedures
adopted by the depositary from time to time.

Neither we, nor any of our agents, will have any responsibility or
liability for any aspect of the depositary's or any participant's records
relating to, or for payments made on account of, beneficial interests in global
security certificates, or for maintaining, supervising or reviewing any of the
depositary's records or any participant's records relating to those beneficial
ownership interests.

The information in this section concerning the depositary and its
book-entry system has been obtained from sources that we believe to be reliable,
but we do not take responsibility for its accuracy.

REPLACEMENT OF CONVERTIBLE PREFERRED STOCK CERTIFICATES

If physical certificates are issued, we will replace any mutilated
certificate at your expense upon surrender of that certificate to the transfer
agent. We will replace certificates that become destroyed, lost or stolen at
your expense upon delivery to us and the transfer of satisfactory evidence that
the certificate

has been destroyed, lost or stolen, together with any indemnity that may be
required by the transfer agent and us.

We, however, are not required to issue any certificates representing shares
of our convertible preferred stock on or after any conversion date thereof. In
place of the delivery of a replacement certificate following such conversion
date, the transfer agent, upon delivery of the evidence and indemnity described
above, will deliver the shares of our common stock issuable pursuant to the
terms of our convertible preferred stock evidenced by the certificate.

DESCRIPTION OF CERTAIN INDEBTEDNESS AND CAPITAL STOCK

REVOLVING CREDIT FACILITY

Our revolving credit facility provides for revolving credit loans in an
aggregate principal amount of up to $105.0 million subject to a reduction in
commitment by the lesser of $30.0 million or 60% of the net proceeds from this
offering. Our revolving credit facility includes a $25.0 million sublimit
available for the issuance of letters of credit and a $10.0 million sublimit for
swingline loans. We have used $14.0 million of the letter of credit sublimit
primarily for the issuance of letters of credit relating to our industrial
revenue bonds. As of December 31, 2001, we had unused borrowing availability
under our revolving credit facility of approximately $24.0 million. A portion of
the proceeds from this offering will be used to repay a portion of the
indebtedness outstanding under our revolving credit facility. See "Use of
Proceeds."

We can use the proceeds of all loans and letters of credit for general
corporate purposes. Borrowings under our revolving credit facility bear interest
based on prime or LIBOR. Borrowings under our revolving credit facility mature
on December 31, 2003, or if earlier, the date on which a change of control
occurs.

Our obligations under our revolving credit facility are secured by
substantially all of our domestic assets and 65% of the stock of applicable
foreign subsidiaries and are guaranteed by some of our domestic subsidiaries.
Our revolving credit facility contains a number of covenants that restrict our
operations. Among other things, our revolving credit facility restricts our
ability to (1) acquire or merge with other businesses, (2) liquidate or sell our
assets outside the ordinary course of business, (3) incur additional
indebtedness and create liens on assets, (4) pay dividends, redeem stock or make
capital distributions, and (5) engage in certain transactions with subsidiaries
and affiliates. In addition, our revolving credit facility requires us to comply
with certain financial covenants, including requiring us to comply with
covenants related to minimum consolidated net worth, total debt to EBITDA
ratios, minimum consolidated EBITDA levels and minimum liquidity ratios. Our
revolving credit facility permits us to pay cash dividends on our convertible
preferred stock and to redeem our capital stock if (i) we are not in default
immediately before and immediately after giving effect to the redemption, (ii)
we are in compliance with our minimum consolidated net worth covenant, (iii) the
ratio of our total consolidated debt to our consolidated earnings before income
taxes, depreciation and amortization is less than 3.00 to 1.00, and (iv) the
ratio of our consolidated earnings before income taxes to consolidated interest
expense is greater than 2.00 to 1.00.

SENIOR NOTE PURCHASE AGREEMENT

In 1997, we issued senior notes in the aggregate principal amount of $65.0
million. The senior notes were issued in three series: (i) $9.0 million
aggregate principal amount of the notes designated as 6.60% senior notes, Series
1997-A; (ii) $47.0 million aggregate principal amount of the notes designated as
6.65% senior notes, Series 1997-B; and (iii) $9.0 million aggregate principal
amount of the notes designated as 6.74% senior notes, Series 1997-C, which will
mature on November 14, 2003, November 14, 2007 and November 14, 2007,
respectively.

The debt represented by the senior notes is senior indebtedness, secured by
all of our domestic assets and 65% of the stock of applicable foreign
subsidiaries. We made a repayment in the amount of $3.0 million on the Series
1997-A on November 14, 2001 and are required to make an additional repayment in
the amount of $3.0 million on the Series 1997-A on each of November 14, 2002 and
November 14, 2003. We are also required to make repayments in the amount of $7.8
million on the Series 1997-B on November 14, 2002 and on each November 14th
thereafter to and including November 14, 2007. The Series 1997-C are not subject
to required prepayment.

The note purchase agreement related to the senior notes contains a number
of covenants that restrict our operations. Among other things, the note purchase
agreement restricts our ability to:

- acquire or merge with other businesses;

- liquidate or sell our assets outside the ordinary course of business;

- incur additional indebtedness and create liens on our assets;

- pay dividends, redeem stock or make capital contributions; and

- engage in certain transactions with subsidiaries and affiliates.

In addition, the note purchase agreement requires us to comply with a maximum
consolidated indebtedness to consolidated total capitalization ratio and a
priority debt ratio.

OTHER INDEBTEDNESS

Our floating rate industrial revenue bonds, which total approximately $11.9
million at December 31, 2001, were issued in 1985 and 1987. The bonds are due in
2012, 2015 and 2025. These bonds bear interest at rates based upon a short-term
tax exempt bond index, as defined in the agreements, which was approximately
1.6% at December 31, 2001 and are backed by letters of credit issued by one of
the banks in our revolving credit facility.

At December 31, 2001, we had approximately $47.4 million of uncommitted
short-term bank credit lines which may be utilized by our European subsidiaries.
At December 31, 2001, there were no borrowings under these lines. Borrowings
under these credit lines bear interest based on LIBOR.

Our foreign long-term debt includes fixed and variable rate debt with the
Industry Ministry of Italy, capital lease obligations and variable rate
borrowings with various international banks that mature between 2002 and 2013.
European long-term debt totaled approximately $11.9 million as of December 31,
2001.

CAPITAL STOCK

Our authorized capital stock includes 50.0 million shares of common stock,
$1.00 par value, and 3.0 million shares of preferred stock, without par value.

Preferred Stock

The preferred stock is issuable in one or more series as described below.
In addition to the convertible preferred stock, we have authorized 500,000
shares of Series C Junior Participating Preferred Stock in connection with our
rights plan described below.

Our certificate of incorporation and Delaware law give our board of
directors the authority, without further stockholder approval, to fix the
following terms with respect to shares of any series of preferred stock:

- the designation of the series;

- the number of shares to comprise the series;

- the voting powers, if any;

- the redemption time or times and price or prices, if any;

- the dividend rate or rates payable, if any, with respect to the shares of
the series, which may be cumulative or noncumulative, and the other
conditions and times and relative preferences of any dividends, if any;

- the rights upon liquidation or distribution of assets, if any;

- the prices or rates of any conversion or exchange rights; and

- any other relative, participating, optional or other special rights,
qualifications, limitations or restrictions of the series.

Share Purchase Rights Plan

In January 1998, we adopted a share purchase rights plan and issued, as a
dividend, one preferred share purchase right for each outstanding share of our
common stock. One purchase right has also been issued with respect to each share
of our common stock issued since the record date of that dividend.

Each purchase right entitles the holder to buy one one-hundredth of a share
of our Series C Junior Participating Preferred Stock at a price of $100.00 per
one one-hundredth of a share, subject to adjustment. The purchase rights will be
exercisable only if a person or group acquires 20% or more of the outstanding
shares of our common stock or commences a tender or exchange offer following
which it would hold 20% or more of the outstanding shares of our common stock.
If a person or a group acquires 20% or more of the outstanding shares of our
common stock, each holder of a purchase right will receive, upon exercise of
each purchase right, shares of our common stock with a market value of two times
the exercise price of the purchase right, except that purchase rights owned by
that acquiring person or group will be void. In the event we are acquired in a
merger or other business combination or 50% or more of our assets or earning
power is sold, each holder of a purchase right will receive, upon exercise,
common stock of Allen Telecom or of the acquiring company, in either case with a
market value of two times the exercise price of the purchase right. Our Board
may redeem the purchase rights at a price of $0.01 per purchase right prior to
the time any person or group acquires 20% or more of the outstanding shares of
our common stock. The purchase rights will expire on January 20, 2008, unless
earlier redeemed or exchanged. The Series C Junior Participating Preferred Stock
will have dividend and liquidation preference over our common stock, but will be
junior to the convertible preferred stock and other series of preferred stock.

Common Stock

The holders of common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of stockholders. Although we are
restricted from paying cash dividends under the terms of the agreements
governing our indebtedness (and, even if we were not so restricted, we do not
currently intend to pay any dividends on our common stock), holders of common
stock are entitled to receive ratably such dividends as may be declared by our
board of directors out of funds legally available therefor after payment of any
dividend preference of preferred stock, including the convertible preferred
stock and the Series C Junior Participating Preferred Stock. In the event of a
liquidation or dissolution, holders of common stock are entitled to share
ratably in all assets remaining after payment of liabilities and liquidation
preference of our preferred stock.

Holders of common stock have no preemptive rights and have no rights to
convert their common stock into any other securities. There are no redemption or
sinking fund provisions applicable to the common stock. All of the outstanding
shares of common stock are fully paid and nonassessable.

Registrar and Transfer Agent

The registrar and transfer agent for our common stock and Series C Junior
Participating Preferred Stock is Fifth Third Bank, 38 Fountain Square Plaza,
Cincinnati, Ohio 45263.

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following is a general discussion of the material United States federal
income tax consequences applicable to holders of the convertible preferred stock
resulting from their purchase, ownership, conversion and disposition of the
convertible preferred stock and any common stock received upon its conversion.
This discussion is based on the Internal Revenue Code of 1986, as amended (the
"Code"), regulations of the Treasury Department ("Treasury Regulations"),
administrative rulings and pronouncements of the Internal Revenue Service
("IRS") and judicial decisions, all of which are subject to change, possibly
with retroactive effect. This discussion does not purport to address all the
United States federal income tax consequences that may be applicable to
particular holders, including brokers or dealers in securities, financial
institutions, traders in securities, persons liable for the alternative minimum
tax, insurance companies, persons that hold the convertible preferred stock or
common stock issued upon its conversion as part of a hedging, conversion,
integrated or constructive sale transaction or as part of a straddle, persons
whose functional currency is not the United States dollar and tax-exempt
organizations. Furthermore, if a partnership holds convertible preferred stock,
the tax treatment of the partner will generally depend on the status of the
partner and the activities of the partnership. In addition, except as otherwise
provided, this discussion addresses only certain United States federal income
tax consequences and does not describe any United States federal estate or gift
tax consequences or the tax consequences arising out of the application of the
tax laws of any state, local or foreign jurisdiction. This discussion applies
only to those persons who are the initial holders of the convertible preferred
stock (who purchase such stock at the initial offering price for cash). In
addition, except as provided below with respect to Non-U.S. Holders, this
discussion is limited to those holders that are U.S. persons who will hold the
convertible preferred stock and the common stock as a "capital asset" within the
meaning of Section 1221 of the Code. As used herein, the term "U.S. Holder"
means a holder that is, for United States federal income tax purposes, (i) a
citizen or individual resident of the United States; (ii) a corporation (or
other entity treated as a corporation) created in or under the laws of the
United States or of any State thereof; (iii) an estate the income of which is
subject to United States federal income taxation regardless of its source; (iv)
a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
persons have the authority to control all substantial decisions of the trust
(including certain trusts in existence on August 20, 1996 and treated as United
States persons prior to such date that timely elected to continue to be treated
as United States persons); or (v) a partnership that is created or organized in
or under the laws of the United States or of any state thereof. The term "Non-
U.S. Holder" means any holder that is not a U.S. Holder.

PROSPECTIVE HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO ANY
FEDERAL, STATE, LOCAL, FOREIGN OR OTHER TAX CONSEQUENCES TO THEM OF PURCHASING,
OWNING, CONVERTING AND DISPOSING OF CONVERTIBLE PREFERRED STOCK AND ANY COMMON
STOCK ISSUED UPON ITS CONVERSION IN LIGHT OF THEIR PERSONAL INVESTMENT
CIRCUMSTANCES.

TAX CONSIDERATIONS FOR U.S. HOLDERS OF CONVERTIBLE PREFERRED STOCK

Distributions in General

We have the right to pay dividends on the convertible preferred stock in
cash, in shares of our common stock, or a combination thereof. If we distribute
our common stock, the distribution will be subject to federal income tax to the
same extent as a cash distribution. The amount of the distribution for federal
income tax purposes will be the fair market value of the common stock on the
date of the distribution, which may be different than the price we used to
determine the number of shares of common stock to be distributed in payment of
the dividend.

Distributions with respect to the convertible preferred stock or common
stock issued upon its conversion will be treated as dividends (taxable as
ordinary income) to the extent of our current and accumulated earnings and
profits as calculated for the United States federal income tax purposes. To the
extent that the amount of a distribution with respect to the convertible
preferred stock or common stock issued upon its conversion exceeds our current
and accumulated earnings and profits of which we currently

have none, it will be treated first as a tax-free return of capital to the
extent of the holder's adjusted tax basis, and thereafter as capital gain from
the sale of the convertible preferred stock (taxable as described below under
"Sale, Redemption or Other Taxable Disposition of the Convertible Preferred
Stock").

Dividends to Corporate Holders

Subject to certain exceptions and limitations, a U.S. Holder that is a
corporation may be entitled to the dividends-received deduction as provided in
Section 243 of the Code (generally at a 70% rate) with respect to amounts
treated as dividends on the convertible preferred stock or common stock issued
upon its conversion but will not be entitled to that deduction with respect to
amounts treated as a return of capital or capital gain. In addition, the benefit
of a dividends-received deduction may be reduced by the corporate alternative
minimum tax. In determining entitlement to the dividends-received deduction,
corporate holders should also consider the provisions of Section 246(c), 246A
and 1059 of the Code and Treasury Regulations promulgated thereunder, and IRS
rulings and administrative pronouncements relating to such Code provisions.
Section 246(c) of the Code disallows the dividends-received deduction in its
entirety if the holder does not satisfy the applicable holding period
requirement for the dividend-paying stock for a period immediately before and
immediately after such holder becomes entitled to receive each dividend on the
stock. Specifically, Section 246(c)(4) of the Code provides that a holder may
not count toward this minimum holding period any period in which the holder (i)
has, among other things, an option to buy or sell convertible preferred stock or
common stock issued upon its conversion which it owns, (ii) is under a
contractual obligation to sell convertible preferred stock or common stock
issued upon its conversion which it owns, (iii) has made (and not closed) a
short sale of substantially identical stock or securities, or (iv) has
diminished its risk of loss by holding one or more positions with respect to
substantially similar or related property. For purposes of (ii) above, the
obligation to sell upon the Company's exercise of its option to redeem the
convertible preferred stock or common stock issued upon its conversion should
not be considered a contractual obligation to sell by a corporate holder. Under
certain circumstances, Section 1059 of the Code (a) reduces (but not below zero)
the tax basis of stock by a portion of any "extraordinary dividends" that are
eligible for the dividends-received deduction and (b) to the extent that such
basis reduction would otherwise reduce the tax basis of the convertible
preferred stock or common stock issued upon its conversion below zero, requires
immediate recognition of gain, which is treated as gain from the sale or
exchange of the stock. In the case of the convertible preferred stock, an
"extraordinary dividend" would include any amount treated as a dividend with
respect to a redemption that is not pro rata to all stockholders (or meets
certain other requirements), without regard to either the relative amount of the
dividend or the holder's holding period for the convertible preferred stock or
common stock issued upon its conversion. Section 246A of the Code contains the
"debt-financed portfolio stock" rules, under which the dividends-received
deduction could be reduced to the extent that a holder incurs indebtedness
directly attributable to its investment in the convertible preferred stock or
common stock issued upon its conversion.

Receipt of Common Stock Upon Conversion of the Convertible Preferred Stock

Gain or loss should not be recognized by a holder upon the conversion of
the convertible preferred stock into common stock, provided no cash is received
upon the conversion. A holder who receives cash in lieu of a fractional share of
common stock will be treated as having received such fractional share and having
exchanged it for cash in a redemption, which would be treated in the manner
described under "Sale, Redemption or other Taxable Disposition of the
Convertible Preferred Stock." As discussed therein, a holder who cannot qualify
for sale or exchange treatment under the rules applicable to redemptions will
generally be taxable on the cash received in lieu of a fractional share as a
distribution described in "Distributions in General" above.

Generally, a holder's adjusted tax basis in the common stock received upon
the conversion of the convertible preferred stock will equal the adjusted tax
basis of the converted convertible preferred stock (other than the portion of
such convertible preferred stock the conversion of which resulted in the

recognition of gain or loss due to the receipt of cash in lieu of fractional
shares). The holding period of such common stock will include the holding period
of the converted convertible preferred stock.

Adjustment of Conversion Price in Respect of Convertible Preferred Stock

In general, adjustments to the conversion ratio of common stock to prevent
dilution because of a stock dividend or stock split will not be taxable.
However, an adjustment to the conversion price ratio to reflect our issuance of
certain rights, warrants, evidences of indebtedness, stock, securities or other
assets to holders of common stock (an "Adjustment") may result in constructive
distributions to the holders of the convertible preferred stock if such change
has the effect of increasing the holder's proportionate interest in the earnings
and profits or assets of the Company. Such an Adjustment and constructive
distribution would occur if the conversion price ratio was adjusted because our
board of directors does not declare a dividend for any quarterly dividend period
as described under "Description of the Convertible Preferred Stock --
Dividends." The amount of any such constructive distribution would be the fair
market value on the date of the Adjustment of the number of shares of common
stock which, if actually distributed to holders of convertible preferred stock,
would produce the same increase in the proportionate interests of such holders
in the assets or earnings and profits of the Company as that produced by the
Adjustment. The distribution would be treated in the manner described above
under "Distributions in General" and "Dividends to Corporate Holders."

Excessive Redemption Price

Under Section 305(c) of the Code and the Treasury Regulations promulgated
thereunder, if the redemption price of convertible preferred stock exceeds its
issue price (i.e., its fair market value at its date of original issue) by more
than a de minimis amount, such excess may be treated as a constructive
distribution that will be treated in the same manner as distributions described
above under "Distributions in General" and "Dividends to Corporate Holders." A
holder of such convertible preferred stock would generally be required to treat
such excess as a constructive distribution received by the holder over the life
of such stock under a constant interest (economic yield) method that takes into
account the compounding of yield. It is anticipated that the mandatory
redemption price of the convertible preferred stock will not exceed its issue
price by more than a de minimis amount. Therefore, we intend to take the
position that our mandatory redemption right does not result in a constructive
distribution.

Sale, Redemption or other Taxable Disposition of the Convertible Preferred
Stock

Upon a sale or other taxable disposition, a holder generally (except upon
certain circumstances as discussed below) will recognize capital gain or loss
for United States federal income tax purposes in an amount equal to the
difference between (i) the sum of the amount of cash and the fair market value
of any property received upon such sale or other taxable disposition and (ii)
the holder's adjusted tax basis in the convertible preferred stock or common
stock issued upon its conversion being disposed. The holder's adjusted tax basis
in the convertible preferred stock will be the cost of such stock, adjusted for
certain distributions and tax-free returns of capital; the holder's adjusted tax
basis in any common stock issued upon the conversion of the convertible
preferred stock is described above under "Receipt of Common Stock Upon
Conversion of the Convertible Preferred Stock." Such gain or loss will be
long-term capital gain or loss if the convertible preferred stock or common
stock issued upon its conversion has been held by the holder for more than one
year at the time of disposition. Long-term capital gains recognized by
noncorporate taxpayers are subject to tax at a maximum rate of 20%. The
deductibility of capital losses is subject to limitations.

Gain or loss recognized by a holder on a redemption of the convertible
preferred stock would be treated as a sale or exchange and therefore qualify for
the treatment described above if, taking into account stock that is actually or
constructively owned under the constructive ownership rules of Section 318 of
the Code by such holder, either (i) the holder's interest in Allen Telecom stock
is completely terminated as a result of the redemption, (ii) the holder's
percentage ownership of Allen Telecom voting stock immediately after the
redemption is less than 80% of such holder's percentage
78

ownership immediately before the redemption or (iii) the redemption is "not
essentially equivalent to a dividend." Whether a redemption is not essentially
equivalent to a dividend depends on each holder's facts and circumstances, but
in any event requires a "meaningful reduction" in such holder's equity interest
in Allen Telecom. Under Section 318 of the Code, a person generally will be
treated as the owner of Allen Telecom stock owned by certain related parties or
certain entities in which the person owns an interest and stock that a holder
could acquire through exercise of an option. For this purpose, an option would
include the conversion right under the convertible preferred stock. A holder of
the convertible preferred stock who sells some or all of the holder's Allen
Telecom stock may be able to take such sales into account to determine whether
any of the foregoing conditions are satisfied.

If none of the above conditions necessary for sale or exchange treatment is
satisfied, the entire amount of the cash (or property) received on a redemption
will be treated as a distribution, which will be treated in the same manner as
distributions described above under "Distributions in General" and "Dividends to
Corporate Holders." In such case, the holder's adjusted tax basis in the
redeemed convertible preferred stock would be transferred to the holder's
remaining shares of Allen Telecom stock, subject, in the case of a corporate
taxpayer, to reduction or possible gain recognition under Section 1059 of the
Code in an amount equal to the nontaxed portion of the dividend. If the holder
does not actually own any other Allen Telecom stock, but, instead, is deemed to
have a constructive interest, the holder may lose the benefit of its adjusted
tax basis in the convertible preferred stock. However, the holder's adjusted tax
basis may be shifted to the stock of the related person whose stock the holder
is deemed to own constructively.

If the holder does not retain any shares of Allen Telecom stock, but
dividend treatment arises because of the constructive ownership rules, such
adjusted tax basis will be entirely lost to the holder.

INFORMATION REPORTING AND BACKUP WITHHOLDING ON U.S. HOLDERS

Information reporting and backup withholding may apply with respect to our
payments of dividends on the convertible preferred stock or common stock issued
upon its conversion and to certain payments of proceeds on the sale or
redemption of the convertible preferred stock. Such payments will be subject to
backup withholding at a rate of 30% for 2002 and 2003, 29% for 2004 and 2005,
and 28% thereafter until December 31, 2010 unless the beneficial owner of such
convertible preferred stock or common stock issued upon its conversion furnishes
the payor or its agent with a taxpayer identification number, certified under
penalties of perjury, and certain other information, or otherwise establishes,
in the manner prescribed by law, an exemption from backup withholding. In
addition, if the convertible preferred stock or common stock issued upon its
conversion is sold to (or through) a "broker," the broker may be required to
withhold such percentage of the entire sales price, unless either (i) the broker
determines that the seller is a corporation or other exempt recipient or (ii)
the seller provides, in the required manner, certain identifying information.
Such a sale must also be reported by the broker to the IRS, unless the broker
determines that the seller is an exempt recipient. The term "broker" as defined
by Treasury Regulations includes all persons who, in the ordinary course of
their business, stand ready to effect sales made by others.

Any amount withheld under the backup withholding rules from a payment to a
holder is allowable as a credit against the holder's United States federal
income tax, which may entitle the holder to a refund, provided that the holder
furnishes the required information to the IRS. In addition, certain penalties
may be imposed by the IRS on a holder who is required to supply information but
does not do so in the proper manner.

TAX CONSIDERATIONS FOR NON-U.S. HOLDERS OF CONVERTIBLE PREFERRED STOCK

Dividends

Dividends, including constructive dividends, paid to a Non-U.S. Holder of
convertible preferred stock or common stock issued upon its conversion will be
subject to withholding of United States federal income tax at a 30% rate or such
lower rate as may be provided by an income tax treaty between the United
79

States and the country of which the Non-U.S. Holder is a tax resident, unless
(i) the dividends are effectively connected with the conduct of a trade or
business of the Non-U.S. Holder within the United States and the Non-U.S. Holder
provides the payor with a Form W-8ECI or (ii) if a tax treaty applies, are
attributable to a U.S. permanent establishment maintained by the Non-U.S.
Holder. In order to claim the benefit of an applicable tax treaty rate, a
Non-U.S. Holder generally must file with the Company or its dividend paying
agent a Form W-8BEN. Dividends that are effectively connected with the conduct
of a trade or business within the United States or, if a tax treaty applies, are
attributable to such a United States permanent establishment, are subject to
United States federal income tax on a net income basis (that is, after allowance
for applicable deductions) at applicable graduated individual or corporate
rates. Any such effectively connected dividends received by a foreign
corporation may, under certain circumstances, be subject to an additional
"branch profits tax" at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty.

A Non-U.S. Holder generally would be subject to United States withholding
tax at the backup withholding rates discussed above rather than at a 30% rate or
a reduced rate under an income tax treaty, unless the Non-U.S. Holder provides
to the payor a Form W-8BEN (or other applicable form) certifying the status of
the holder as a nonresident of the United States.

At present, the Company does not have either current or accumulated
earnings and profits as determined for United States tax purposes. Moreover,
because the Company lacks earnings and profits, the Company believes that it is
reasonable to take the position that there is no obligation to withhold United
States tax in respect of dividends until such time as the Company has earnings
and profits. If a withholding agent collects United States tax from sales
proceeds or otherwise on account of a Non-U.S. Holder in respect of the
convertible preferred stock or common stock issued upon its conversion for a
taxable year when the Company has no earnings and profits, the Non-U.S. Holder
may claim a refund of excess withholding tax by filing a United States tax
return. The Company will upon request provide information reasonably necessary
to support such claim.

See above "Tax Considerations for U.S. Holders of Convertible Preferred
Stock" for when distributions will be treated as dividends.

GAIN ON DISPOSITION OF CONVERTIBLE PREFERRED STOCK

A Non-U.S. Holder generally will not be subject to United States federal
income tax with respect to gain recognized on a sale or other taxable
disposition of convertible preferred stock or common stock issued upon its
conversion unless (i) (x) the gain is effectively connected with a trade or
business conducted by the Non-U.S. Holder within the United States or (y) if a
tax treaty applies, the gain is attributable to a United States permanent
establishment maintained by the Non-U.S. Holder, (ii) in the case of a Non-U.S.
Holder who is an individual and holds the convertible preferred stock or common
stock issued upon its conversion as a capital asset, such holder is present in
the United States for 183 or more days in the taxable year of the sale or other
disposition and certain other conditions are met, (iii) the Non-U.S. Holder is
subject to tax pursuant to certain provisions of the Code applicable to United
States expatriates and former residents or (iv) the Company is or has been a
"U.S. real property holding corporation" for United States federal income tax
purposes at any time within the shorter of the five-year period preceding such
disposition or the period such Non-U.S. Holder held the convertible preferred
stock. If we currently are, or were to become, a U.S. real property holding
corporation, gains realized upon a disposition of convertible preferred stock by
a Non-U.S. Holder which did not directly or indirectly own more than 5% of the
convertible preferred stock during the shorter of the periods described above
generally would not be subject to United States federal income tax so long as
the convertible preferred stock is "regularly traded" on an established
securities market within the meaning of the applicable Treasury Regulation. It
is not clear whether the convertible preferred stock will qualify as regularly
traded for purposes of the aforementioned rule. However, we believe that we are
not currently, and do not anticipate becoming, a "U.S. real property holding
corporation" for United States federal income tax purposes.

If an individual Non-U.S. Holder falls under clause (i) above, such
individual generally will be taxed on the net gain derived from a sale under
regular graduated United States federal income tax rates. If an individual
Non-U.S. Holder falls under clause (ii) above, such individual generally will be
subject to a flat 30% tax on the gain derived from a sale, which may be offset
by certain United States capital losses (notwithstanding the fact that such
individual is not considered a resident of the United States). Thus, individual
Non-U.S. Holders who have spent (or expect to spend) 183 days or more in the
United States in the taxable year in which they contemplate a sale of
convertible preferred stock are urged to consult their tax advisors as to the
tax consequences of such sale.

If a Non-U.S. Holder that is a foreign corporation falls under clause (i)
of the first sentence above, it generally will be taxed on its net gain under
regular graduated United States federal income tax rates and, in addition, will
be subject to the branch profits tax equal to 30% of its "effectively connected
earnings and profits" within the meaning of the Code for the taxable year, as
adjusted for certain items, unless it qualifies for a lower rate under an
applicable income tax treaty.

No United States federal income tax will be imposed on a Non-U.S. Holder
upon the conversion of the convertible preferred stock into Common Stock if no
cash is received. See "Tax Considerations for U.S. Holders of Convertible
Preferred Stock -- Receipt of Common Stock Upon Conversion of the Convertible
Preferred Stock."

Federal Estate Tax

Convertible preferred stock or common stock issued upon its conversion
owned or treated as owned by an individual who is neither a United States
citizen nor a United States resident (as defined for United States federal
estate tax purposes) at the time of death will be included in the individual's
gross estate for the United States federal estate tax purposes, unless an
applicable estate tax treaty provides otherwise and, therefore, may be subject
to United States federal estate tax.

Information Reporting and Backup Withholding Tax on Non-U.S. Holders

Payment of dividends, including constructive dividends, is subject to
information reporting requirements. These information reporting requirements
apply even if withholding was not required because the dividends were
effectively connected with a trade or business in the United States of the
Non-U.S. Holder or withholding was reduced or eliminated by an applicable income
tax treaty. Copies of the information returns reporting such dividends and
withholding may also be made available to the tax authorities in the country in
which the Non-U.S. Holder is a resident under the provisions of an applicable
income tax treaty or agreement. As discussed above in "Tax Considerations for
Non-U.S. Holders of Convertible Preferred Stock -- Dividends," United States
backup withholding at the rates discussed above will generally apply on payments
of dividends to Non-U.S. Holders that fail to furnish to the payor a Form
W-8BEN, or otherwise establish an exemption.

Payment by a United States office of a broker of the proceeds of a sale of
convertible preferred stock or common stock issued upon its conversion, or the
proceeds of a redemption of convertible preferred stock that are not treated as
a dividend is subject to both backup withholding and information reporting
unless the beneficial owner certifies under penalties of perjury that it is a
Non-U.S. Holder on Form W-8BEN, or otherwise establishes an exemption. Backup
withholding and information reporting generally will not apply to payment of the
proceeds of a sale effected at a foreign office of a broker. If, however, such
broker is, for United States federal income tax purposes, a U.S. person, a
controlled foreign corporation or a foreign person 50% or more of whose gross
income for certain periods is derived from activities that are effectively
connected with the conduct of a trade or business in the United States, such
payments will not be subject to backup withholding but will be subject to
information reporting unless (i) such broker has documentary evidence in its
records that the beneficial owner is a Non-U.S. Holder and certain other
certification conditions are met, or (ii) the beneficial owner otherwise
establishes an exemption, provided such broker does not have actual knowledge
that the payee is a United States person.

Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules will be allowed as a credit against such holder's
United States federal income tax liability, which may entitle such holder to a
refund, provided the required information is furnished to the IRS.

THE FOREGOING SUMMARY IS INCLUDED HEREIN FOR GENERAL INFORMATION ONLY AND
DOES NOT DISCUSS ALL ASPECTS OF UNITED STATES FEDERAL INCOME TAXATION THAT MAY
BE RELEVANT TO A PARTICULAR PURCHASER OR HOLDER OF CONVERTIBLE PREFERRED STOCK
IN LIGHT OF ITS PARTICULAR CIRCUMSTANCES AND INCOME TAX SITUATION. ACCORDINGLY,
EACH PURCHASER OR HOLDER OF THE CONVERTIBLE PREFERRED STOCK SHOULD CONSULT WITH
ITS OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO SUCH PURCHASER OR
HOLDER FROM THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE CONVERTIBLE PREFERRED
STOCK, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN INCOME
AND OTHER TAX LAWS.

UNDERWRITING

Subject to the terms and conditions set forth in an underwriting agreement
between the underwriters and us, each of the underwriters named below, through
their representative, Bear, Stearns & Co. Inc., has severally agreed to purchase
from us the aggregate numbers of shares of convertible preferred stock set forth
opposite its name below.

NUMBER OF
UNDERWRITERS SHARES
------------ ---------

Bear, Stearns & Co. Inc. ...................................
McDonald Investments Inc. ..................................
A.G. Edwards & Sons, Inc. ..................................
Needham & Company, Inc. ....................................
H.C. Wainwright & Co., Inc. ................................
---------
Total............................................. 1,000,000
=========

The underwriting agreement provides that the obligations of the several
underwriters thereunder are subject to approval of certain legal matters by
counsel and to various other conditions. The underwriters are obligated to
purchase and accept delivery of all of the shares of convertible preferred
stock, other than those covered by the over-allotment option described below, if
they purchase any of the shares of convertible preferred stock.

The underwriters propose to offer the shares of convertible preferred stock
directly to the public at the public offering price set forth on the cover page
of this prospectus and at such price less a concession not in excess of $
per share of convertible preferred stock to certain other dealers who are
members of the National Association of Securities Dealers, Inc. The underwriters
may allow, and such dealers may re-allow, concessions not in excess of $ per
share of convertible preferred stock to certain other dealers. After the
offering, the public offering price, concessions and other selling terms may be
changed by the underwriters. The convertible preferred stock is offered subject
to receipt and acceptance by the underwriters and to certain other conditions,
including the right to reject orders in whole or in part.

We have granted a 30-day over-allotment option to the underwriters to
purchase up to an aggregate of 150,000 additional shares of convertible
preferred stock exercisable at the price to the public less underwriting
discounts and commissions, each as set forth on the cover page of this
prospectus. If the underwriters exercise such option, in whole or in part, then
each underwriter will become obligated, subject to conditions, to purchase a
number of additional shares of convertible preferred stock approximately
proportionate to such underwriter's initial purchase commitment.

The underwriting agreement provides that we will indemnify the underwriters
against certain liabilities under the Securities Act or will contribute to
payments that the underwriters may be required to make in respect thereof.

We have agreed that, for a period of 90 days from the original issuance
date of the convertible preferred stock, without the prior written consent of
Bear, Stearns & Co. Inc., we will not file with the SEC a registration statement
under the Securities Act relating to, or directly or indirectly, sell, offer to
sell, contract to sell, grant any option to purchase (other than employee stock
options), issue any instrument convertible into or exchangeable for, or
otherwise transfer or dispose of (or enter into any transaction or device which
is designed to, or could be expected to, result in the disposition in the future
of), any shares of our common stock, except upon the conversion, exercise or
exchange of any options, warrants or other securities outstanding on the date of
this prospectus in accordance with the terms thereof, or upon the exercise of
any employee stock options.

Our president and chief executive officer, executive vice president and
chief financial officer and each of our directors have agreed that, for a period
of 90 days from the original issuance date of the convertible preferred stock,
without the prior written consent of Bear, Stearns & Co. Inc., they will not,
directly or indirectly, offer, sell, agree to offer or sell, solicit offers to
purchase, grant any call option or purchase any

put option with respect to, pledge, borrow or otherwise dispose of any relevant
security (as defined below), will not establish or increase any "put equivalent
position" or liquidate or decrease any "call equivalent position" with respect
to any relevant security (in each case within the meaning of Section 16 of the
Exchange Act and the rules and regulations promulgated thereunder), or otherwise
enter into any swap, derivative or other transaction or arrangement that
transfers to another, in whole or in part, any economic consequence of ownership
of a relevant security, whether or not such transaction is to be settled by
delivery of relevant securities, other securities, cash or other consideration,
and will not file or participate in the filing with the SEC of any registration
statement, or circulate or participate in the circulation of any preliminary or
final prospectus or other disclosure document with respect to any proposed
offering or sale of any relevant security, and will not exercise any rights any
of them may have to require registration with the SEC of any proposed offering
or sale of any relevant security. Notwithstanding the foregoing, such officers
and directors may transfer any relevant securities by bona fide gift, will or
intestate succession. As used in this paragraph, "relevant security" means the
convertible preferred stock, our common stock, any other equity security of ours
or of any of our subsidiaries or any security convertible into, or exercisable
or exchangeable for, the convertible preferred stock, our common stock or other
such equity security.

We issued 2,271,391 shares of our common stock to Bartley R.F. Systems,
Inc. in connection with our acquisition of substantially all of its assets. On
February 6, 2002, we requested pursuant to our registration rights agreement
with Bartley R.F. Systems, Inc. that Bartley R.F. Systems, Inc. and related
persons and entities suspend any dispositions of those shares, on or subsequent
to that notice, pursuant to the registration statement and prospectus we filed
for the resale of those shares for a 90-day period in connection with our
offering of the convertible preferred stock.

In order to facilitate the offering, certain persons participating in the
offering may engage in transactions that stabilize, maintain or otherwise affect
the price of the convertible preferred stock during and after the offering.
Specifically, the underwriters may over-allot or otherwise create a short
position in the convertible preferred stock for their own account by selling
more shares of convertible preferred stock than have been sold to them by us.
The underwriters may elect to cover any such short position by purchasing shares
of convertible preferred stock in the open market or by exercising the
over-allotment option granted to the underwriters. In addition, the underwriters
may stabilize or maintain the price of the convertible preferred stock by
bidding for or purchasing shares of convertible preferred stock in the open
market and may impose penalty bids, under which selling concessions allowed to
syndicate members or other broker-dealers participating in the offering are
reclaimed if shares of convertible preferred stock previously distributed in the
offering are repurchased in connection with stabilization transactions or
otherwise. The effect of these transactions may be to stabilize or maintain the
market price at a level above that which might otherwise prevail in the open
market. The imposition of a penalty bid may also affect the price of the
convertible preferred stock to the extent that it discourages resales thereof.

In the ordinary course of their respective businesses, the underwriters or
their affiliates have engaged, or may in the future engage, in commercial
banking or investment banking transactions with us and our affiliates. In
particular, an affiliate of McDonald Investments Inc. acts as the administrative
and collateral agent and is a lender under our revolving credit facility and
such affiliate will receive greater than 10% of the proceeds of this offering
pursuant to the repayment of a portion of the amount outstanding under our
revolving credit facility. Accordingly, this offering is being conducted in
accordance with Rule 2710(c)(8) of the National Association of Securities
Dealers, Inc.

WHERE YOU CAN FIND MORE INFORMATION

We are a reporting company and file annual reports, quarterly reports and
current reports, proxy statements and other information with the SEC. Our file
number is 1-6016. We are required to file electronic versions of these documents
with the SEC. Those documents may be accessed through the SEC's Internet site at
http://www.sec.gov. Our common stock is listed on the New York Stock Exchange
and the Pacific Exchange.

You may read and copy materials that we have filed with the SEC at the SEC
Public Reference Room located at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549. Copies of materials can also be obtained at prescribed rates from
the SEC Public Reference Room. You can call the SEC at 1-800-732-0330 for
further information about the Public Reference Room.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

This prospectus incorporates certain documents regarding us by reference
which are not presented herein or delivered herewith. The information
incorporated by reference is considered to be part of this prospectus, and
information that we file later with the SEC will automatically update and
supersede the information in this prospectus. The following documents are
incorporated by reference:

- our annual report on Form 10-K for the year ended December 31, 2001;

- our current report on Form 8-K filed on February 14, 2002;

- the description of our common stock that is contained in our Second
Restated Certificate of Incorporation (filed as Exhibit number 4(a) to
our Registration Statement on Form S-8, Registration No. 333-51739, filed
on May 4, 1998 (SEC file number 1-6016)); and

- the description of our preferred stock purchase rights issued pursuant to
our rights plan which is contained in our Form 8-A (as amended) filed
with the SEC on January 9, 1998.

All documents subsequently filed by us with the SEC pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act before the termination of the
offering shall be deemed to be incorporated by reference into this prospectus.

Any statements made in this prospectus or in a document incorporated by
reference herein is deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement in this prospectus or in any other
subsequently filed document, which is also incorporated by reference herein,
modifies or supersedes such statement. Any statement so modified or superseded
will not be deemed, except as so modified or superseded, to constitute a part of
this prospectus.

The information relating to us contained in this prospectus should be read
together with the information in the documents incorporated by reference. In
addition, certain information, including financial information, contained in
this prospectus or incorporated herein by reference should be read in
conjunction with documents we have filed with the SEC.

You may request a copy of these SEC filings, without charge, by written or
oral request directed to our office: Allen Telecom Inc., 25101 Chagrin
Boulevard, Beachwood, Ohio 44122-5687, Attention: General Counsel, Telephone:
(216) 765-5818.

LEGAL MATTERS

The validity of the authorization and issuance of the convertible preferred
stock offered hereby will be passed upon for us by Jones, Day, Reavis & Pogue.
Certain matters will be passed upon for the underwriters by Fulbright & Jaworski
L.L.P., New York, New York.

EXPERTS

The consolidated financial statements as of December 31, 2000 and 2001 and
for each of the three years in the period ended December 31, 2001, included and
incorporated by reference in this prospectus and the related financial statement
schedule incorporated in this prospectus by reference from Allen Telecom Inc.'s
Annual Report on Form 10-K for the year ended December 31, 2001 have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports appearing herein and incorporated herein by reference and have been so
included and incorporated in reliance upon the reports of such firm given upon
their authority as experts in accounting and auditing.

ALLEN TELECOM INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

AUDITED FINANCIAL STATEMENTS:
Report of Independent Accountants......................... F-2
Consolidated Balance Sheets as of December 31, 2000 and
2001................................................... F-3
Consolidated Statements of Operations for the years ended
December 31, 1999, 2000 and 2001....................... F-4
Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 2000 and 2001....................... F-5
Consolidated Statements of Stockholders' Equity for the
years ended December 31, 1999, 2000 and 2001........... F-6
Notes to Consolidated Financial Statements................ F-7

F-1

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of Allen Telecom Inc.

We have audited the accompanying consolidated financial statements of Allen
Telecom Inc. and its subsidiaries (the "Company") as of December 31, 2000 and
2001, and the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the three years in the period ended December
31, 2001. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on the financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Allen Telecom Inc. and its
subsidiaries at December 31, 2000 and 2001, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 2001, in conformity with accounting principles generally accepted in the
United States of America.

/s/ DELOITTE & TOUCHE LLP

Cleveland, Ohio
February 13, 2002

F-2

ALLEN TELECOM INC.

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31,
----------------------
2000 2001
--------- ---------
(AMOUNTS IN THOUSANDS)

ASSETS

Current Assets:
Cash and cash equivalents.............................. $ 10,539 $ 16,368
Accounts receivable, less allowance for doubtful
accounts -- 2000 - $4,739; 2001 - $3,338.............. 93,815 92,291
Inventories............................................ 101,640 124,026
Deferred income taxes.................................. 3,820 2,660
Recoverable income taxes............................... 5,643 20,169
Other current assets................................... 1,668 2,416
-------- --------
Total Current Assets.............................. 217,125 257,930
-------- --------
Property, Plant and Equipment............................. 41,279 41,290
Excess of Cost Over Net Assets of Businesses Acquired..... 129,190 140,995
Deferred Income Taxes..................................... 44,295 39,401
Other Assets.............................................. 41,133 32,340
-------- --------
TOTAL ASSETS................................................ $473,022 $511,956
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable and current maturities of long-term
debt.................................................. $ 3,796 $ 12,318
Accounts payable....................................... 45,181 40,355
Accrued expenses (including accrued wages and
commissions -- 2000 - $12,107; 2001 - $11,614)........ 26,305 27,827
Income taxes payable................................... 3,922 4,781
Deferred income taxes.................................. 5,290 9,852
-------- --------
Total Current Liabilities......................... 84,494 95,133
-------- --------
Long-Term Debt............................................ 134,639 140,530
Deferred Income Taxes..................................... 9,168 2,164
Other Liabilities......................................... 9,740 15,772
-------- --------
Total Liabilities................................. 238,041 253,599
-------- --------
Commitments and Contingencies (Note 5).................... -- --
-------- --------
Stockholders' Equity:
Common stock, par value $1.00; authorized -- 50,000
shares; issued -- 2000 - 30,092; 2001 - 32,500;
outstanding -- 2000 - 28,022; 2001 - 30,425......... 30,092 32,500
Paid-in capital...................................... 184,066 203,548
Retained earnings.................................... 69,067 69,676
Accumulated other comprehensive loss................. (31,948) (30,671)
Less: Treasury stock -- common shares, at cost,
2000 - 2,070; 2001 - 2,075 shares.............. (14,730) (15,440)
Unearned compensation.......................... (1,566) (1,256)
-------- --------
Total Stockholders' Equity........................ 234,981 258,357
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................. $473,022 $511,956
======== ========

The accompanying notes are an integral part of these financial statements.
F-3

ALLEN TELECOM INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

YEAR ENDED DECEMBER 31,
--------------------------------
1999 2000 2001
-------- -------- --------
(AMOUNTS IN THOUSANDS,
EXCEPT PER SHARE DATA)

SALES...................................................... $336,213 $392,608 $394,601
Cost of sales.............................................. 247,064 277,666 296,342
-------- -------- --------
Gross profit............................................... 89,149 114,942 98,259
Operating Expenses:
Selling, general and administrative expenses............. 54,819 54,271 56,776
Research and development and product engineering costs... 27,946 25,442 26,086
Amortization of goodwill................................. 7,020 7,822 7,901
-------- -------- --------
Operating (loss) income.................................... (636) 27,407 7,496
Other income, net.......................................... 3,370 -- --
Interest and financing expenses:
Interest expense......................................... (9,632) (11,022) (11,281)
Interest income.......................................... 1,486 1,989 1,034
-------- -------- --------
(Loss) income before taxes and minority interests.......... (5,412) 18,374 (2,751)
Benefit from (provision for) income taxes.................. 1,844 (7,530) 1,073
-------- -------- --------
(Loss) income before minority interests.................... (3,568) 10,844 (1,678)
Minority interests......................................... (1,650) (91) (145)
-------- -------- --------
(LOSS) INCOME FROM CONTINUING OPERATIONS................... (5,218) 10,753 (1,823)
Discontinued operations -- gain from emission testing
business................................................. 2,363 1,300 --
-------- -------- --------
NET (LOSS) INCOME.......................................... $ (2,855) $ 12,053 $ (1,823)
======== ======== ========
EARNINGS (LOSS) PER COMMON SHARE:
Basic and Diluted:
(Loss) income from continuing operations.............. $ (0.19) $ 0.38 $ (0.06)
Discontinued emission testing business................ 0.09 0.05 --
-------- -------- --------
Net (loss) income........................................ $ (0.10) $ 0.43 $ (0.06)
======== ======== ========
Weighted Average Shares Outstanding:
Basic................................................. 27,480 27,820 28,090
Diluted............................................... 27,480 28,270 28,090

The accompanying notes are an integral part of these financial statements.
F-4

ALLEN TELECOM INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31,
--------------------------------
1999 2000 2001
-------- -------- --------
(AMOUNTS IN THOUSANDS)

CASH FLOWS FROM OPERATING ACTIVITIES:

(Loss) income from continuing operations................. $ (5,218) $ 10,753 $ (1,823)
Adjustments to reconcile (loss) income to operating cash
flow:
Depreciation.......................................... 14,914 13,353 13,313
Amortization of goodwill.............................. 7,020 7,822 7,901
Amortization of capitalized software.................. 2,776 2,532 4,022
Other amortization.................................... 220 313 310
Deferred income taxes................................. 172 5,676 2,439
Non-cash loss on write-off of capital assets.......... 3,983 385 --
Gain on sale of investments........................... (3,378) -- --
Non-cash pension gain................................. -- (1,160) --
Changes in operating assets and liabilities:
Receivables........................................... (10,350) (16,702) 4,381
Inventories........................................... (1,370) (29,155) (5,659)
Accounts payable and accrued expenses................. 7,344 16,680 (22,401)
Income taxes payable.................................. (10,717) (9,617) (5,945)
Other, net............................................ (520) (3,465) 2,993
-------- -------- --------
Cash provided (used) by operating activities............... 4,876 (2,585) (469)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures..................................... (9,491) (15,082) (10,044)
Investments in wireless communications subsidiaries (net
of cash acquired)..................................... (9,042) (8,512) (5,689)
Capitalized software product costs....................... (1,927) (4,088) (2,191)
Sales and retirements of fixed assets.................... 504 1,631 4,864
Sale of investments...................................... 9,686 -- --
Sale of discontinued emissions testing business.......... 9,387 -- --
-------- -------- --------
Cash used by investing activities.......................... (883) (26,051) (13,060)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Repayment of) proceeds from long-term borrowings........ (3,214) 16,531 (8,737)
Proceeds from sale and leaseback transaction............. -- -- 4,869
Exercise of stock options................................ 1,059 764 939
Collection on installment notes receivable............... -- 2,900 1,000
Treasury stock sold to employee benefit plans............ 871 752 910
Acquisition of common stock treasury shares.............. -- (179) (1,315)
-------- -------- --------
Cash (used) provided by financing activities............... (1,284) 20,768 (2,334)
-------- -------- --------
Net cash flow provided by discontinued operations.......... 1,810 -- --
-------- -------- --------
NET CASH PROVIDED (USED)................................... 4,519 (7,868) (15,863)
Effect of exchange rate changes on cash.................... (2,334) (3,678) 1,261
Net cash flow from change in year-end of subsidiaries...... -- -- 20,431
Cash and cash equivalents at beginning of year............. 19,900 22,085 10,539
-------- -------- --------
Cash and cash equivalents at end of year................... $ 22,085 $ 10,539 $ 16,368
======== ======== ========

The accompanying notes are an integral part of these financial statements.
F-5

ALLEN TELECOM INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

ACCUMULATED
OTHER
COMPREHENSIVE COMPREHENSIVE
COMMON PAID-IN INCOME RETAINED INCOME TREASURY UNEARNED
TOTAL STOCK CAPITAL (LOSS) EARNINGS (LOSS) STOCK COMPENSATION
-------- ------- -------- ------------- -------- ------------- -------- ------------
(AMOUNTS IN THOUSANDS, EXCEPT COMMON SHARE DATA)

BALANCE, DECEMBER 31, 1998... $250,081 $29,759 $180,604 $59,869 $ (2,255) $(15,985) $(1,911)
Comprehensive loss:
Net loss................... (2,855) -- -- $ (2,855) (2,855) -- -- --
--------
Other comprehensive income
(loss):
Minimum pension liability
adjustment............. 240 -- -- 240 -- -- -- --
Foreign currency
translation
adjustments............ (8,670) -- -- (8,670) -- -- -- --
--------
Other comprehensive
loss................... -- -- -- (8,430) -- (8,430) -- --
--------
Comprehensive loss..... -- -- -- $(11,285) -- -- -- --
========
Exercise of stock options.... 1,059 219 765 -- -- 75 --
Employee stock plans tax
benefits................... 414 -- 414 -- -- -- --
Treasury stock reissued,
131,285 common shares...... 871 -- (61) -- -- 932 --
Restricted stock, net........ (619) 32 (387) -- -- -- (264)
Amortization of unearned
compensation............... 391 -- -- -- -- -- 391
-------- ------- -------- ------- -------- -------- -------
BALANCE, DECEMBER 31, 1999... 240,912 30,010 181,335 57,014 (10,685) (14,978) (1,784)
Comprehensive loss:
Net income................. 12,053 -- -- $ 12,053 12,053 -- -- --
Other comprehensive loss:
Foreign currency
translation
adjustments............ (21,263) -- -- (21,263) -- (21,263) -- --
--------
Comprehensive loss....... -- -- -- $ (9,210) -- -- -- --
========
Exercise of stock options.... 764 74 656 -- -- 34 --
Employee stock plans tax
benefits................... 1,630 -- 1,630 -- -- -- --
Treasury stock reissued,
43,941 common shares....... 573 -- 359 -- -- 214 --
Restricted stock, net........ (1) 8 86 -- -- -- (95)
Amortization of unearned
compensation............... 313 -- -- -- -- -- 313
-------- ------- -------- ------- -------- -------- -------
BALANCE, DECEMBER 31, 2000... 234,981 30,092 184,066 69,067 (31,948) (14,730) (1,566)
Net income from change in
fiscal year-end of
subsidiaries............... 2,432 -- -- 2,432 -- -- --
Comprehensive income (loss):
Net loss................... (1,823) -- -- $ (1,823) (1,823) -- -- --
--------
Other comprehensive income
(loss):
Foreign currency
translation
adjustments............ 3,896 -- -- 3,896 -- 3,896 -- --
Minimum pension liability
adjustment............. (2,664) -- -- (2,664) -- (2,664) -- --
Derivative instruments... 45 -- -- 45 -- 45 -- --
--------
Other comprehensive
income................. -- -- -- 1,277 -- -- -- --
--------
Comprehensive loss....... -- -- -- $ (546) -- -- -- --
========
Acquisition of subsidiary.... 20,233 2,271 17,962 -- -- -- --
Exercise of stock options.... 939 137 802 -- -- -- --
Employee stock plans tax
benefits................... 413 -- 413 -- -- -- --
Treasury stock acquired, net
4,720 common shares........ (405) -- 305 -- -- (710) --
Amortization of unearned
compensation............... 310 -- -- -- -- -- 310
-------- ------- -------- ------- -------- -------- -------
BALANCE, DECEMBER 31, 2001... $258,357 $32,500 $203,548 $69,676 $(30,671) $(15,440) $(1,256)
======== ======= ======== ======= ======== ======== =======

The accompanying notes are an integral part of these financial statements.
F-6

ALLEN TELECOM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1999, 2000 AND 2001

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting policies followed by the Company that materially affect the
determination of financial position and results of operations are described
below.

Accounting Estimates: The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.

Basis of Consolidation: The Company's consolidated financial statements
include the accounts of all wholly owned and majority owned subsidiaries.
Intercompany accounts and transactions have been eliminated. To facilitate
preparation of financial statements, the Company's principal European operations
are included in the consolidated financial statements on a two-month delayed
basis for fiscal years 1999 and 2000. Effective January 1, 2001, such European
operations changed their fiscal year-end from October 31 to December 31,
consistent with the balance of the Company's operations. The results of
operations (net income of $2,432,000) for these European operations for November
and December 2000 were recorded directly to retained earnings in the first
quarter of 2001 and the results of operations for the period January 1, 2001
through December 31, 2001 were included in the 2001 reported results of
operations.

The cash flow of such European operations for the two month period November
and December 2000 is summarized as follows (amounts in thousands):

Net income from operations.................................. $ 2,432
Increase in inventories..................................... (8,491)
Decrease in receivables..................................... 3,129
Increase in accounts payable................................ 13,892
Decrease in taxes payable................................... (5,946)
Net increase in fixed assets................................ (1,201)
Borrowings.................................................. 16,836
Other....................................................... (220)
-------
Increase in cash and cash equivalents..................... $20,431
=======

Revenue Recognition: Sales are recognized when products are shipped or
services are performed. Our Wireless Engineering and Consulting Services segment
provides engineering services and software to major telecommunication vendors
and system operators. These services and products are sold and/or licensed and
are separately stated in a given sales contract, or in separate agreements, and
therefore do not constitute multiple-element arrangements. In accordance with
Statement of Position 97-2, "Software Revenue Recognition", revenue relating to
the software licenses, which do not require significant production,
modification, or customization, is recognized when all of the following criteria
are met: persuasive evidence of an arrangement exists, delivery has occurred,
the fee is fixed or determinable and collectibility is probable. Engineering
services revenue, which excludes customer maintenance and support, is recognized
when services are performed. Other engineering services revenue which includes
items such as ongoing customer maintenance and support is recognized ratably
over the given contract period.

In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 (SAB 101), "Revenue Recognition in Financial
Statements". SAB 101 summarizes certain of the staff's views in applying
generally accepted accounting principles to revenue recognition in financial

F-7

ALLEN TELECOM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

statements. SAB 101 was adopted in June 2000. The provisions of SAB 101 are
being followed and did not require any change in the Company's revenue
recognition policies and practices.

Cash and Cash Equivalents: Cash equivalents consist of temporary bank
deposits and money market instruments with an original maturity of three months
or less at the date of purchase. The Company invests its excess cash in bank
deposits, money market, and tax-exempt securities, which are afforded one of the
two highest ratings by nationally recognized ratings firms.

Valuation of Inventories: The Company values inventories including
materials, labor and overhead at the lower of cost (first-in, first-out) or
market. Inventories consisted of the following at December 31, 2000 and 2001,
net of reserves (amounts in thousands):

2000 2001
-------- --------

Raw material........................................... $ 56,366 $ 66,957
Work-in-process........................................ 25,674 23,639
Finished goods......................................... 19,600 33,430
-------- --------
$101,640 $124,026
======== ========

Certain of these inventories pertain to the production of sophisticated
equipment that could be subject to technological obsolescence. The Company
maintains and periodically revises reserves for excess inventory based on the
most current information available of anticipated usage requirements.

Property, Plant and Equipment: Property, plant and equipment is recorded
at cost, less accumulated depreciation and amortization. Land improvements,
buildings and machinery and equipment are depreciated over their estimated
useful lives under the straight-line method. The provision for amortization of
leasehold improvements is based on the term of the related lease or the
estimated useful lives, whichever is shorter. Maintenance, repairs and minor
renewals and betterments are charged to expense. Property, plant and equipment
consisted of the following at December 31, 2000 and 2001 (amounts in thousands):

2000 2001
-------- --------

Land and improvements.................................. $ 1,663 $ 1,565
Buildings.............................................. 16,568 14,951
Machinery and equipment................................ 80,462 92,483
Leasehold improvements................................. 5,967 7,120
-------- --------
104,660 116,119
Less accumulated depreciation and amortization......... (63,381) (74,829)
-------- --------
$ 41,279 $ 41,290
======== ========

The Company's estimated useful lives of property, plant and equipment are
as follows:

Land improvements...................................... 5 to 40 years
Buildings.............................................. 20 to 40 years
Machinery and equipment................................ 3 to 10 years
Leasehold improvements................................. Term of lease
(currently not longer
than 25 years)

Computer Software Costs: The Company's policy is to capitalize costs
incurred in creating computer software products once technological feasibility
is established and to amortize such costs over periods ranging from three to ten
years. The Company also capitalizes costs incurred in the development of

F-8

ALLEN TELECOM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

computerized databases, which are amortized over periods of three to twenty
years. The Company reviews the amounts capitalized for impairment whenever
events or changes in circumstances indicate that the carrying amounts of the
assets may not be recoverable. In 1999, 2000 and 2001, approximately $1,927,000,
$4,088,000 and $2,191,000, respectively, of these costs were capitalized and
approximately $2,776,000, $2,532,000 and $4,022,000, respectively, were
amortized.

Excess of Cost Over Net Assets of Businesses Acquired (Goodwill): The
excess of investments in consolidated subsidiaries over the fair value of assets
at acquisition is being amortized on a straight-line basis over periods not
exceeding forty years. The Company's policy is to evaluate goodwill for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. For purposes of determining impairment
and recoverability, the Company periodically reviews the operating results and
cash flows of individual business units and would re-evaluate goodwill, when
required, based on an undiscounted operating cash flow basis. An impairment
loss, if required, would be recorded in the period such determination is made.
Goodwill is net of accumulated amortization of $32,927,000 and $41,682,000 as of
December 31, 2000 and 2001, respectively. See Impact of New Accounting
Pronouncements below.

Foreign Currency Translation: Assets and liabilities of the Company's
foreign subsidiaries are translated into U.S. dollars at the current rate of
exchange, while sales and expenses are translated at the average exchange rate
during the year. Adjustments from translating foreign subsidiaries' financial
statements are excluded from the results of operations and are reported as a
component of Accumulated other comprehensive loss.

The company's policy for transactions denominated in a currency other than
the functional currency is to expense gains and losses as incurred. The net gain
or (loss) included in selling, general and administrative expenses is $754,000
in 1999, ($181,000) in 2000 and $286,000 in 2001.

Research and Development Costs: Expenditures relating to the development
of new products and processes, including significant improvements to existing
products, are expensed as incurred. Research and development expenses were
$26,317,000, $25,442,000 and $26,086,000 in 1999, 2000 and 2001, respectively.
In addition, the Company incurred other engineering expenses relating to product
development (that do not meet the accounting definition of "Research and
Development") in the amount of $1,629,000 in 1999. There were no such other
engineering costs in 2000 and 2001.

Stock Based Compensation: The Company accounts for stock based
compensation awards pursuant to Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," and its related interpretations
which prescribe the use of the intrinsic value based method. Accordingly, no
compensation cost has been recognized for its fixed stock option plans since the
exercise price of the employee stock options equals the market price of the
underlying stock on the date of option grant. The Company presents the
disclosure requirements of Statement of Financial Accounting Standards No. 123,
"Accounting for Stock Based Compensation." See Note 4 for additional
information.

Income Taxes: A deferred tax asset and/or liability is computed for both
the expected future impact of differences between the financial statements and
tax bases of assets and liabilities and for the expected future tax benefit to
be derived from tax loss and tax credit carryforwards.

Earnings Per Common Share: Basic earnings per share are based on the
weighted average number of common shares outstanding during the period. Diluted
earnings per common share are based on the weighted average number of common
shares outstanding during the period plus, if dilutive, the incremental number
of common shares issuable on a pro forma basis upon the exercise of employee
stock options,

F-9

ALLEN TELECOM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

assuming the proceeds are used to repurchase outstanding shares at the average
market price during the year. A reconciliation of the Basic and Diluted shares
is provided below (in thousands):

1999 2000 2001
------ ------ ------

Weighted average common shares outstanding -- Basic...... 27,480 27,820 28,090
Additional common shares issuable for stock options...... -- 450 --
------ ------ ------
Common shares -- Diluted................................. 27,480 28,270 28,090
====== ====== ======

For the years ended December 31, 1999 and 2001, approximately 186,000 and
253,000 shares, respectively, attributable to outstanding stock options, were
excluded from the calculation of diluted earnings per common share because the
effect was antidilutive.

Derivative Financial Instruments: The Company adopted Financial Accounting
Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No.
133, "Accounting for Derivative Instruments and Hedging Activities," in June
1998. The Company utilizes hedging activities primarily in its foreign
subsidiaries to limit foreign currency exchange rate risk on receivables and to
offset the impact of currency rate changes with regard to certain intercompany
payables and foreign denominated purchase obligations. The adoption of SFAS No.
133 as of January 1, 2001 did not have a material impact on the Company's
results of operations or financial position.

Reclassifications: Certain amounts in the 1999 and 2000 financial
statements have been reclassified to conform to the 2001 presentation.

Impact of New Accounting Pronouncements: In June 2001, the FASB issued
SFAS No. 141, "Business Combinations". SFAS No. 141 requires that the purchase
method of accounting be used for all business combinations initiated after June
30, 2001. As specified therein, goodwill and certain intangible assets acquired
will remain on the balance sheet and not be amortized. On an annual basis, and
when there is reason to suspect that their values have been diminished or
impaired, these assets must be tested for impairment, with appropriate
write-downs, if necessary. The Company implemented SFAS No. 141 for all
acquisitions subsequent to June 30, 2001.

In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets". SFAS No. 142 changes the accounting for goodwill from an amortization
method to an impairment only approach. Amortization of goodwill, including
goodwill recorded in past business combinations, will cease upon adoption of
this statement. The Company is required to implement SFAS No. 142 on January 1,
2002 and it has not determined, in all cases, the impact that this statement
will have on its consolidated financial position or results of operations.
Earnings per common share for the years ending December 31, 1999, 2000 and 2001
would have increased by approximately $.26 per share in 1999 and $.28 per share
in 2000 and 2001, as a result of excluding the amortization of goodwill, which
will be eliminated in 2002 when the new Standard goes into effect.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations", which addresses financial accounting and reporting for
obligations associated with the retirement of tangible long lived assets and
associated asset retirement costs. The new rules apply to legal obligations
associated with the retirement of long-lived assets that result from the
acquisition, construction, development and (or) normal operation of a long-lived
asset. SFAS No. 143 is effective for the Company at the beginning January 1,
2003. The Company believes the adoption of SFAS No. 143 will not, at this time,
have a material impact on its consolidated financial position or results of
operations.

F-10

ALLEN TELECOM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

of Accounting Principles Board Opinion No. 30, "Reporting the Results of
Operations -- Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions", for
the disposal of a segment of a business (as previously defined in that opinion).
SFAS No. 144 requires that one accounting model be used for long-lived assets to
be disposed of by sale, whether previously held and used or newly acquired, and
broadens the presentation of discontinued operations to include more disposal
transactions than were included under the previous standards. The Company will
adopt SFAS No. 144 on January 1, 2002, as required; however, adoption of the
statement is not expected to have a material impact, if any.

NOTE 2: FINANCING

Long-term obligations consisted of the following (amounts in thousands):

2000 2001
-------- --------

Credit agreement borrowings............................ $ 62,431 $ 73,677
Floating rate industrial revenue bonds due 2012-2025... 11,900 11,900
Senior notes payable due 2002-2007..................... 65,000 62,000
Capital lease obligations (See Note 5)................. -- 5,357
Other.................................................. 90 965
Unamortized debt expense............................... (986) (1,051)
-------- --------
138,435 152,848
Less current maturities................................ (3,796) (12,318)
-------- --------
$134,639 $140,530
======== ========

In 2001, the Company amended its domestic revolving credit agreement which
expires on December 31, 2003. The amendments provided for the approval of the
acquisition of Bartley R.F. Systems, Inc. and an adjustment of the Company's
covenant requirements. This domestic revolving credit agreement totals
$105,000,000 of commitments. One such amendment provides that the domestic
revolving credit facility will be permanently reduced by the lesser of
$30,000,000 or 60% of the net proceeds of an equity offering. Of the total
$105,000,000 commitment at December 31, 2001, $14,015,000 has been utilized for
the issuance of letters of credit relating principally to the Company's
industrial revenue bonds. The outstanding borrowings under this domestic
revolving credit agreement totaled $67,005,000 at December 31, 2001. The balance
of funds available under this revolving credit agreement may be utilized for
borrowings or other letters of credit; however, a maximum of $25,000,000 may be
allocated to such letters of credit. At December 31, 2001, $23,980,000 was
available under this agreement. This obligation is collateralized by
substantially all domestic assets. The Company has also pledged 65% of the stock
of applicable foreign subsidiaries and a guarantee is provided by certain
domestic subsidiaries in support of this obligation. Interest may be determined
on a LIBOR or prime rate basis at the Company's option. The Company has agreed
to pay a facility fee in the range of 0.375% to 0.5% per annum on the total
amount of the commitment. During 2001, the average interest rate for all
domestic credit agreement borrowings was 6.0%.

The Company also has $47,364,000 of short-term credit lines which may be
utilized by certain of its European subsidiaries. At year end, there were no
direct borrowings under these agreements. Foreign long-term debt includes
long-term arrangements at fixed and variable rates with the Industry Ministry of
Italy totaling $2,715,000 (due 2002-2013), and variable rate borrowings with
various international banks of $3,957,000 (due 2002-2008). These arrangements
bear interest based on LIBOR. European long-term debt also includes a capital
lease obligation of $4,527,000 at December 31, 2001, which results from the sale

F-11

ALLEN TELECOM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

and leaseback of a building during the second quarter 2001, at one of our
European subsidiaries. During 2001, the average interest rate for all foreign
credit arrangements approximated 2.3%.

The floating rate industrial revenue bonds bear interest at rates based
upon a short-term tax exempt bond index, as defined in the agreements, which
approximated 1.6% at December 31, 2001. During 2001, the average interest rate
for all industrial revenue borrowings approximated 2.6%.

In 1997, the Company issued $65,000,000 of notes in a private placement
transaction. The outstanding balance of $62,000,000 at December 31, 2001 is due
in years 2002-2007. These notes originally had a weighted average life of 7 1/2
years and have a weighted average interest rate of 6.65%. The notes are
collateralized and rank equally with the Company's other secured indebtedness.

The aggregate maturities of long-term obligations for the years 2002
through 2006 are as follows (amounts in thousands):

2002........................................................ $12,318
2003........................................................ 79,645
2004........................................................ 9,033
2005........................................................ 9,200
2006........................................................ 9,214

The Company's domestic borrowing agreements include various restrictive
covenants as to the amount and type of indebtedness, investments and guarantees,
maintenance of net worth, liquidity, earnings before interest, taxes,
depreciation and amortization, the purchase or redemption of the Company's
shares, the disposition of assets of the Company not in the ordinary course of
business and acquisitions. The Company was in compliance with these revised
covenants at December 31, 2001. The Company's debt agreements restrict, under
limited circumstances, its ability to pay cash dividends, without the bank's
consent. Further, the Company's ability to pay cash dividends may be dependent,
in part, on its subsidiaries' ability to make cash dividends and other payments
to the Company.

NOTE 3: OTHER ASSETS, LIABILITIES AND INCOME

Other assets consisted of the following (amounts in thousands):

2000 2001
------- -------

Capitalized computer software and database files, net of
accumulated amortization of $2,532 and $3,818,
respectively........................................... $ 8,244 $ 7,446
Insurance deposits....................................... 9,238 9,368
Other.................................................... 23,651 15,526
------- -------
$41,133 $32,340
======= =======

Other liabilities consisted of the following (amounts in thousands):

2000 2001
------- -------

Minority interests....................................... $ 117 $ 287
Long-term pension and postretirement benefits............ 6,214 10,158
Other.................................................... 3,409 5,327
------- -------
$ 9,740 $15,772
======= =======

F-12

ALLEN TELECOM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The components of Other income, net in 1999, pertain principally to gains
and losses from communications investments and is comprised of the following
(amounts in thousands):

1999
------

RF Micro Devices Inc........................................ $ (165)
NextWave Telecom Inc. (gain on sale)........................ 3,500
Other....................................................... 35
------
$3,370
======

NOTE 4: CAPITAL STOCK AND STOCK COMPENSATION PLANS

The Company is authorized to issue up to 50,000,000 shares of common stock,
$1.00 par value, and 3,000,000 shares of preferred stock, without par value, in
one or more series. In addition, 500,000 shares of Series C Junior Participating
Preferred Stock are authorized for issuance under the Company's Stockholder
Rights Plan. The Company can fix the powers, designations, preferences and
rights of each of the preferred stock series. See also Note 14, "Subsequent
Event."

The Company has two active stock option plans, the 1992 Stock Plan and the
1994 Non-Employee Directors Stock Option Plan. The 1982 Stock Plan, under which
options still remain outstanding, was terminated in 1992.

The Company's 1992 Stock Plan provides for the granting of options (and
restricted shares as discussed below) to key employees as determined by the
Management Compensation Committee of the Board of Directors. The total number of
shares for which the Company may grant options and award restricted shares of
common stock under the 1992 Stock Plan cannot exceed 3,528,221 shares, subject
to certain adjustments. Options are awarded at a price not less than the fair
market value on the date the option is granted, have a ten-year term whereby 50%
of the option shares vest after two years and an additional 25% in each of years
three and four. Options may contain stock appreciation rights under which the
Company, upon request of the optionee, may, at its discretion, purchase the
exercisable portion of an option for cash and/or shares at a price equal to the
difference between the option price and the market price of the shares covered
by such portion of the option in lieu of issuing shares upon exercise. There
were no exercises of stock appreciation rights in 1999, 2000 and 2001.

Pursuant to the 1994 Non-Employee Directors Stock Option Plan, the total
number of shares to be issued may not exceed 500,000 shares. Each Non-Employee
Director (other than the Chairman or Vice Chairman) automatically receives an
option to purchase 3,000 shares of common stock per year ("Formula Awards").
Each new Non-Employee Director automatically receives an option to purchase
4,000 shares of common stock on the date such new director joins the Board of
Directors. The Plan also permits discretionary grants to directors who are not
receiving Formula Awards. Formula awards and discretionary awards granted under
the 1994 Stock Plan have a ten-year term and vest in the same manner as the 1992
Stock Plan, subject to certain accelerated vesting upon the cessation of
service.

In addition to the foregoing, certain Non-Employee Directors may receive
non-qualified discretionary awards of options to purchase shares of common stock
which are not pursuant to the 1994 Stock Plan. The options which are not
pursuant to the 1994 Stock Plan are awarded at a price not less than the fair
market value on the date the option is granted, have a ten-year term and either
vest 33 1/3% on each of the first, second and third anniversaries of the grant
or vest in the same manner as the 1992 and 1994 Stock Plans, depending upon the
grant. Additionally, the non-qualified awards are subject to certain accelerated
vesting upon cessation of service.

F-13

ALLEN TELECOM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table summarizes the status of outstanding options as of
December 31, 2001:

STOCK OPTIONS OUTSTANDING WEIGHTED AVERAGE STOCK OPTIONS EXERCISABLE
--------------------------- --------------------- ---------------------------
RANGE OF CONTRACTUAL EXERCISE WEIGHTED AVERAGE
EXERCISE PRICES SHARES LIFE PRICE SHARES EXERCISE PRICE
--------------- --------- ----------- -------- --------- ----------------

$ 5.38 - $10.77 914,004 6.92 years $ 7.54 478,696 $ 7.56
$11.28 - $19.97 1,923,890 6.66 years $15.33 856,340 $15.86
$20.00 - $28.00 397,402 4.19 years $21.66 397,402 $21.66
--------- ---------
$ 5.38 - $28.00 3,235,296 6.43 years $13.91 1,732,438 $14.90
========= =========

Stock option activity for the three years ended December 31, 2001 is
summarized as follows:

WEIGHTED AVERAGE
SHARES EXERCISE PRICE
--------- ----------------

Balance, December 31, 1998....................... 2,118,099 $14.96
Granted (weighted average fair value $4.63).... 1,032,500 $ 7.58
Exercised...................................... (246,246) $ 4.30
Terminated and cancelled....................... (280,589) $14.51
---------
Balance, December 31, 1999....................... 2,623,764 $13.10
Granted (weighted average fair value $10.52)... 613,000 $16.36
Exercised...................................... (85,838) $ 8.89
Terminated and cancelled....................... (89,965) $14.99
---------
Balance, December 31, 2000....................... 3,060,961 $13.82
Granted (weighted average fair value $8.60).... 429,450 $12.73
Exercised...................................... (136,943) $ 6.85
Terminated and cancelled....................... (118,172) $15.52
---------
Balance, December 31, 2001....................... 3,235,296 $13.91
=========

The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted average
assumptions used for stock option grants: expected volatility of 56%, 60% and
65%, risk free interest rates of 5.49%, 6.09% and 5.16%, and expected lives of
7.1 years, 7.1 years and 7.4 years for 1999, 2000 and 2001, respectively. The
calculations assume no future dividend payments.

Restricted stock awards made to date under the 1992 Stock Plan were issued
at no cash cost to the recipients; however, such employees generally agreed to
forego salary increases and new stock option grants for a period of two years,
other than for exceptional promotions. The restricted shares generally vest in
25% increments in the seventh, eighth, ninth and tenth year from the year of
award. An accelerated vesting schedule may be triggered if certain performance
targets are achieved. Generally, the vesting of 50% of such shares may be
accelerated (but not sooner than three years from the award year) based upon the
average sale price of the Company's stock price during a period of 91
consecutive calendar days exceeding specified target levels. The remaining 50%
of such shares may be accelerated based on average earnings per common share
over three consecutive years exceeding specified target levels beginning with
the award year. Restricted shares are subject to forfeiture in certain
circumstances as defined in the 1992 Stock Plan.

F-14

ALLEN TELECOM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Restricted stock activity for the three years ended December 31, 2001 is
summarized as follows:

SHARES
-------

Balance, December 31, 1998.................................. 205,250
Granted (weighted average fair value $8.00)............... 50,000
Vested.................................................... (2,517)
Terminated and cancelled.................................. (18,434)
-------
Balance, December 31, 1999.................................. 234,299
Granted (weighted average fair value $13.94).............. 15,000
Vested.................................................... (28,524)
Terminated and cancelled.................................. (6,518)
-------
Balance, December 31, 2000.................................. 214,257
Granted................................................... --
Vested.................................................... (36,419)
Terminated and cancelled.................................. --
-------
Balance, December 31, 2001.................................. 177,838
=======

Unearned compensation with respect to restricted shares, representing the
fair value of the restricted shares at the date of award, is charged to income
over a ten-year period or the period of actual vesting whichever is shorter.
Compensation expense with respect to restricted shares, net of forfeitures,
amounted to $193,000 in 1999, $313,000 in 2000 and $310,000 in 2001.

At December 31, 2000 and 2001, 3,697,011 and 3,790,737 common shares,
respectively, were reserved for outstanding stock options and for future grants
of stock options and restricted shares under all Stock Plans.

If the Company had elected to recognize compensation cost for its stock
based compensation plans based on the fair value determined pursuant to the
Black-Scholes option pricing model at the grant dates for awards under those
plans in accordance with SFAS No. 123, net income and earnings per common share
would have been reduced to the pro forma amounts below (amounts in thousands,
except per share data):

1999 2000 2001
------- ------- -------

Net (loss) income:
As reported................................... $(2,855) $12,053 $(1,823)
Pro forma..................................... $(5,035) $10,136 $(4,409)
(Loss) earnings per common share,
basic and diluted:
As reported................................... $ (0.10) $ 0.43 $ (0.06)
Pro forma..................................... $ (0.18) $ 0.36 $ (0.16)

NOTE 5: COMMITMENTS AND CONTINGENCIES

The Company's leases consist primarily of facilities and equipment and
expire principally between 2002 and 2010. A number of leases require that the
Company pay certain executory costs (taxes, insurance and maintenance) and
contain renewal and purchase options. Annual rental expense for operating leases
included in results from continuing operations approximated $4,400,000 in 1999,

F-15

ALLEN TELECOM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

$4,942,000 in 2000 and $5,700,000 in 2001. Future minimum payments under
noncancellable operating and capital leases as of December 31, 2001 were as
follows (amounts in thousands):

OPERATING CAPITAL
--------- -------

2002....................................................... $ 7,155 $ 1,174
2003....................................................... 6,860 1,168
2004....................................................... 6,170 739
2005....................................................... 4,230 724
2006....................................................... 3,650 711
Thereafter................................................. 12,440 2,136
------- -------
Total minimum lease payments.......................... $40,505 6,652
=======
Less amount representing interest..................... (1,295)
-------
$ 5,357
=======

Assets recorded under capital leases at December 31, 2001 are included in
Property, Plant and Equipment as follows (amounts in thousands):

2001
--------

Land........................................................ $ 432
Buildings................................................... 5,111
Machinery and equipment..................................... 1,262
--------
6,805
Less accumulated amortization............................... (2,620)
--------
$ 4,185
========

The Company is self-insured for health care and workers' compensation up to
predetermined amounts above which third party insurance applies. The Company is
fully insured through third party insurance for general liability and product
liability. The Company is contingently liable to insurance carriers under its
workers' compensation and liability policies and has provided letters of credit
in favor of these carriers in the amount of $700,000.

On December 11, 2001, a lawsuit was filed against the Company in the United
States District Court for the District of Delaware by a competitor,
TruePosition, Inc., and its subsidiary, KSI, Inc. The plaintiffs allege that the
Company, through its Grayson Wireless Division, has infringed three patents in
connection with the Company's GEOMETRIX wireless geolocation business. The
plaintiffs seek injunctive relief, compensatory and treble damages and
attorneys' fees. In the Company's answer filed on January 18, 2002, it has
denied the plaintiffs' allegations and has asserted a counterclaim against the
plaintiffs of infringement of one of the Company's patents. The Company believes
that it has meritorious defenses against the claims asserted by the plaintiffs,
and intends to vigorously defend the lawsuit. However, the Company cannot give
assurance that it will ultimately prevail in this action. Whether the Company
ultimately wins or loses, litigation could be time-consuming and costly and
injure its reputation. If the plaintiffs prevail in this action, the Company may
be required to negotiate royalty or license agreements with respect to the
patents at issue, and may not be able to enter into such agreements on
acceptable terms. Any limitation on the Company's ability to provide a service
or product could cause it to lose revenue-generating opportunities and require
it to incur additional expenses. The Company may also be required to indemnify
customers for any expenses or liabilities resulting from the claimed
infringements. These potential costs and expenses, as well as the need to pay
any damages awarded in favor of the

F-16

ALLEN TELECOM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

plaintiffs, could adversely affect the Company's business, financial position,
results of operations or cash flow.

The Company is also a party to various other legal proceedings, lawsuits
and other claims arising in the ordinary course of its business involving such
matters as contract disputes, product liability, casualty claims, employment
practices and intellectual property infringement. The Company does not believe
that such other litigation, if adversely determined, would have a material
adverse effect on the Company's business, financial position, results of
operations or cash flow.

The Company is subject to federal, state and local laws designed to protect
the environment and believes that, as a general matter, its policies, practices,
and procedures are properly designed to reasonably prevent risk of environmental
damage and financial liability to the Company. The Company has identified
potential environmental damage at one formerly occupied manufacturing facility.
In this regard, the Company has engaged a contractor to evaluate the site and
determine the cost, if any, to resolve environmental damage at this site. While
the ultimate cost cannot yet be specifically determined, the Company currently
believes the costs of remediation will not exceed $350,000. The Company also
believes it is reasonably possible that environmental related liabilities may
exist with respect to one industrial site formerly occupied by the Company.
Based upon environmental site assessments, the Company believes that the cost of
any potential remediation, for which the Company may ultimately be responsible,
will not have a material adverse effect on the Company's business, financial
position, results of operations or cash flow.

NOTE 6: PENSION AND EMPLOYEE BENEFIT PLANS

The Company has noncontributory pension plans covering the majority of its
full-time domestic employees. Plans covering salaried employees provide benefits
that are based on years of service and compensation during the ten-year period
prior to retirement, while for hourly employees it typically provides benefits
based on specified amounts for each year of service. Domestic pension costs are
funded in compliance with the requirements of the Employee Retirement Income
Security Act of 1974, as amended, as employees become eligible to participate,
generally upon employment.

Net periodic pension cost for the Company's plans included the following
components (amounts in thousands):

1999 2000 2001
------- ------- -------

Service cost benefits earned during the year............ $ 1,413 $ 1,006 $ 1,081
Interest cost on the projected benefit obligation....... 2,404 2,496 2,685
Actual loss (income) on plan assets..................... (5,970) (868) 1,619
Net curtailment/settlement (gain)/loss.................. 13 (1,160) (7)
Net amortization and deferral........................... 3,395 (2,237) (4,488)
------- ------- -------
Net periodic pension cost (income)...................... $ 1,255 $ (763) $ 890
======= ======= =======

F-17

ALLEN TELECOM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A reconciliation of the plans' projected benefit obligation, fair value of
plan assets, and funding status is as follows (amounts in thousands):

2000 2001
-------- --------

Projected benefit obligation:
Balance, beginning of year............................ $ 33,879 $ 35,451
Service cost.......................................... 1,006 1,081
Interest cost......................................... 2,496 2,685
Benefits paid and plan expenses....................... (2,220) (2,480)
Loss recognized....................................... 1,431 2,099
Settlements and other................................. (1,141) (102)
-------- --------
$ 35,451 $ 38,734
======== ========
Fair value of plan assets:
Balance, beginning of year............................ $ 32,526 $ 31,763
Income (loss) on assets............................... 868 (1,619)
Employer contributions................................ 589 374
Benefits paid and plan expenses....................... (2,220) (2,480)
-------- --------
$ 31,763 $ 28,038
======== ========
Funding Status:
Projected benefit obligation.......................... $(35,451) $(38,734)
Fair value of plan assets............................. 31,763 28,038
-------- --------
Unfunded obligation................................... (3,688) (10,696)
Unrecognized:
Net (gain) loss.................................... (1,051) 5,563
Prior service cost................................. 1,778 1,603
Transition assets.................................. (17) --
Additional minimum liability.......................... (195) (4,876)
-------- --------
Net accrued liability................................. $ (3,173) $ (8,406)
======== ========

Plan assets consist principally of equity securities (including 92,000
common shares of the Company).

With respect to certain of the Company's pension plans, the accumulated
pension obligation exceeds the fair value of the plan assets, as follows
(amounts in thousands):

2000 2001
------ -------

Accumulated benefit obligation............................ $4,493 $36,424
Related fair value of plan assets......................... -- $28,038

The weighted average rates used in determining pension cost for the plans
are:

2000 2001
---- ----

Discount rate............................................... 7 1/2% 7 1/4%
Expected rate of increase in compensation................... 5% 5%
Expected long-term rate of return on plan assets............ 9 3/4% 9 3/4%

F-18

ALLEN TELECOM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company provides health care and life insurance benefits for certain
retired employees who reach retirement age while working for the Company. The
components of the expense for post-retirement health care and life insurance
benefits are as follows (amounts in thousands):

1999 2000 2001
---- ---- ----

Service cost benefits attributed to service during period... $ 3 $ -- $ --
Interest cost on accumulated post retirement benefit
obligation................................................ 101 114 124
Amortization of (gain) loss................................. (1) (6) 4
---- ---- ----
Net post retirement health care cost........................ $103 $108 $128
==== ==== ====

The components of the accumulated post-retirement health and life insurance
benefit obligations (all of which are unfunded) are as follows (amounts in
thousands):

1999 2000 2001
------ ------ ------

Retirees................................................. $1,409 $1,641 $1,707
Fully eligible active plan participants.................. 125 80 86
Unrecognized net gain (loss)............................. 110 (32) (41)
------ ------ ------
Accumulated post retirement benefit obligations.......... $1,644 $1,689 $1,752
====== ====== ======

A reconciliation of the accumulated post-retirement health and life
insurance benefit cost is as follows (amounts in thousands):

2000 2001
------ ------

Balance as of January 1.................................... $1,644 $1,689
Net post retirement benefit cost:
Interest cost............................................ 114 124
Amortization of losses................................... (6) 4
Actual benefits paid....................................... (63) (65)
------ ------
Balance as of December 31.................................. $1,689 $1,752
====== ======

The actuarial calculation assumed a health care cost trend rate of 8.8% in
1999, 8.4% in 2000 and 8.0% in 2001. The assumed trend rate was reduced based on
the most current data. The assumed rate decreases approximately 0.4% per year
through the year 2009 to 5.0% and remains constant beyond that point. Assumed
health care cost trend rates have an effect on the amounts reported for the
health care plans. A one-percentage-point change (plus or minus) in the assumed
health care cost trend rules would have the following effects (amounts in
thousands):

PLUS MINUS
1% POINT 1% POINT
-------- --------

Effect on total of service and interest cost
components............................................. $ 5 $ (4)
Effect on post-retirement benefit obligation............. $62 $(55)

The weighted average discount rate used in determining the accumulated
post-retirement benefit obligations was 7.75% in 1999, 7.50% in 2000 and 7.25%
in 2001.

F-19

ALLEN TELECOM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 7: INCOME TAXES

Information with respect to income taxes in continuing operations is as
follows (amounts in thousands):

1999 2000 2001
-------- ------- -------

(Loss) income before taxes and minority interests:
Domestic........................................... $(21,804) $ 7,850 $(5,712)
Foreign............................................ 16,392 10,524 2,961
-------- ------- -------
$ (5,412) $18,374 $(2,751)
======== ======= =======
(Benefit from) provision for income taxes:
Current:
Federal......................................... $(11,779) $(6,122) $(7,707)
Foreign......................................... 9,363 7,636 3,895
State and local................................. 400 340 300
-------- ------- -------
(2,016) 1,854 (3,512)
-------- ------- -------
Deferred:
Federal......................................... (946) 5,528 678
Foreign......................................... 1,740 720 1,765
State and local................................. (622) (572) (4)
-------- ------- -------
172 5,676 2,439
-------- ------- -------
$ (1,844) $ 7,530 $(1,073)
======== ======= =======

A reconciliation of the provision for (benefit from) income taxes at the
U.S. Federal statutory rate of 35% to the reported tax is as follows (amounts in
thousands):

1999 2000 2001
------- ------- -------

Provision for (benefit from) taxes computed at the
U.S. Federal statutory rate......................... $(1,894) $ 6,431 $ (963)
State and local income taxes, net of Federal income
tax effect.......................................... 246 418 192
Net lower tax rates on foreign income................. (663) (404) (2,833)
Impact of non-deductible goodwill amortization........ 2,380 2,680 2,736
Benefit of foreign sales corporation and other tax
credits............................................. (1,025) (400) (450)
Impact of tax rate change on prior undistributed
foreign earnings.................................... (998) -- --
Other, net............................................ 110 (1,195) 245
------- ------- -------
$(1,844) $ 7,530 $(1,073)
======= ======= =======

F-20

ALLEN TELECOM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table summarizes the total (benefit from) provision for
income taxes (amounts in thousands):

1999 2000 2001
------- ------- -------

Continuing operations................................. $(1,844) $ 7,530 $(1,073)
Discontinued operations............................... 1,403 700 --
Allocated to equity:
Employee stock plans................................ (415) (1,630) (413)
Pension gain (loss)................................. 148 -- (1,630)
------- ------- -------
$ (708) $ 6,600 $(3,116)
======= ======= =======

The components of deferred tax assets (liabilities) are comprised of the
following as of December 31, 2000 and 2001 (amounts in thousands):

2000 2001
-------- --------

Gross deferred tax assets:
Inventory............................................ $ 6,035 $ 6,372
Bad debt reserves.................................... 791 800
Pensions and deferred compensation................... 3,382 4,992
Tax credit carryforwards............................. 3,762 4,429
Plant consolidation reserves......................... 1,802 956
Net operating loss carryforwards..................... 22,935 22,541
Depreciation......................................... 340 2,226
Foreign earnings rate differential................... 5,647 --
Other................................................ 758 223
-------- --------
45,452 42,539
-------- --------
Gross deferred tax liabilities:
Intangible assets.................................... (2,334) (2,630)
Withholding taxes.................................... (3,558) (4,955)
Other................................................ (5,903) (4,909)
-------- --------
(11,795) (12,494)
-------- --------
Net deferred tax asset............................... $ 33,657 $ 30,045
======== ========

During 1999, 2000 and 2001, general business tax credits of approximately
$680,000, $620,000 and $450,000 generated in the respective years were used to
reduce the provision for income taxes. At December 31, 2001, the Company also
has available alternative minimum tax credits in the amount of $476,000
available to reduce future Federal income tax liabilities.

In general, United States income taxes or foreign withholding taxes are not
provided on undistributed earnings of the Company's foreign subsidiaries because
of the intent to reinvest these earnings. The amount of undistributed earnings
which are considered to be indefinitely reinvested is approximately $76,600,000
at December 31, 2001. While the amount of federal income taxes, if such earnings
are distributed in the future, cannot now be determined, such taxes may be
reduced by tax credits and other deductions. The Company has provided U.S.
income taxes on undistributed earnings that are not considered indefinitely
reinvested. The amount of undistributed earnings in China that is not
indefinitely reinvested is $2,000,000, for which U.S. taxes provided is
$730,000.

F-21

ALLEN TELECOM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company has U.S. net operating loss carryforwards totaling
approximately $94,400,000 available to reduce future taxable income. Of such
carryforwards, $4,800,000 expires in 2011 and $89,600,000 in 2018 through 2021.
At December 31, 2001, the Company has recorded a net U.S. deferred tax asset
pertaining to the recognition of the benefit on the aforementioned operating
loss carryforwards, net deductible temporary differences and tax credits in the
amount of approximately $41,800,000. The Company has not provided any valuation
allowance with respect to this asset, as it believes its realization is "more
likely than not." This determination is primarily based upon our expectation
that future U.S. operations will be sufficiently profitable to utilize the
operating loss carryforwards, as well as, various tax, business and other
planning strategies available to the Company. We cannot assure you that we will
be able to realize this asset or that future valuation allowances will not be
required. The failure to utilize this asset would adversely affect our results
of operations and financial position.

NOTE 8: INDUSTRY SEGMENT AND GEOGRAPHIC DATA

The Company conducts its business through two segments based on products
provided and services rendered: Wireless Communications Equipment and Wireless
Engineering and Consulting Services. Wireless Communications Equipment consists
of four product lines: Base Station Subsystems and Components, Repeaters and
In-Building Coverage Products, Base Station and Mobile Antennas and Geolocation
Products.

The Company provides products and services on a global basis to many of the
worlds largest wireless communications OEMs and carriers. The Company supplies
many different customized Base Station Subsystems and Components that are
incorporated in cell sites including filters, duplexers, power amplifiers,
combiners, microwave radios and related products. Repeater and In-Building
Coverage Products support both coverage and capacity enhancements for carriers,
these products include repeaters, distributed antenna systems, bi-directional
boosters as well as test equipment and analysis software. The Base Station and
Mobile Antenna product line manufactures a comprehensive line of base station
and mobile antennas serving all major wireless standards and frequencies. The
Geolocation Products product line manufactures, installs and services a network
based geolocation solution that enables carriers to determine the location of
wireless callers without the need of the caller having a special handset.

The Wireless Engineering and Consulting Services segment provides frequency
planning and microwave coordination services as well as network design and field
engineering services to wireless communication carriers.

The following shows the operating results and asset positions for each of
the reportable segments for the years ended December 31, 1999, 2000 and 2001
(amounts in thousands):

1999 2000 2001
-------- -------- --------

Sales to external customers:
Wireless communications equipment
Base station subsystems and components........ $143,285 $190,934 $182,964
Repeater and in-building coverage products.... 93,528 78,751 94,523
Base station and mobile antennas.............. 76,840 97,820 88,218
Geolocation products.......................... -- -- 7,846
-------- -------- --------
Total Wireless communications equipment.......... 313,653 367,505 373,551
Wireless engineering and consulting services..... 22,560 25,103 21,050
-------- -------- --------
Total sales...................................... $336,213 $392,608 $394,601
======== ======== ========

F-22

ALLEN TELECOM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1999 2000 2001
-------- -------- --------

Operating (loss) income:
Wireless communications equipment................ $ 11,098 $ 38,226 $ 21,159
Wireless engineering and consulting services..... 1,034 4,426 1,025
-------- -------- --------
12,132 42,652 22,184
Goodwill amortization............................ (7,020) (7,822) (7,901)
General corporate expenses....................... (5,748) (7,423) (6,787)
-------- -------- --------
Operating (loss) income.......................... $ (636) $ 27,407 $ 7,496
======== ======== ========
Segment Assets:
Wireless communications equipment................ $248,148 $261,227 $272,674
Wireless engineering and consulting services..... 14,579 13,676 12,360
-------- -------- --------
262,727 274,903 285,034
Goodwill......................................... 134,723 129,190 140,995
Deferred income taxes............................ 37,247 48,115 42,061
Other general corporate assets................... 16,733 20,814 43,866
-------- -------- --------
Total assets..................................... $451,430 $473,022 $511,956
======== ======== ========
Depreciation and software amortization:
Wireless communications equipment................ $ 14,296 $ 12,830 $ 14,440
Wireless engineering and consulting services..... 3,264 2,955 2,825
Fixed asset and capitalized software additions:
Wireless communications equipment................ $ 10,730 $ 16,925 $ 10,510
Wireless engineering and consulting services..... 643 2,227 1,715

The geographic distribution of the Company's sales and long-lived assets
(excluding deferred income taxes) is as follows (amounts in thousands):

1999 2000 2001
-------- -------- --------

Sales:
United States.................................... $179,772 $196,783 $184,427
Italy............................................ 110,701 156,189 147,229
Germany.......................................... 55,055 37,581 59,292
Other............................................ 59,429 74,708 90,451
Intercompany..................................... (68,744) (72,653) (86,798)
-------- -------- --------
Total.............................................. $336,213 $392,608 $394,601
======== ======== ========
Long-lived assets:
United States.................................... $190,950 $184,087 186,071
Italy............................................ 12,650 13,649 14,004
Germany.......................................... 8,181 9,041 7,696
Other............................................ 5,218 4,825 6,854
-------- -------- --------
Total.............................................. $216,999 $211,602 $214,625
======== ======== ========

The geographic distribution of sales is based on where such products are
manufactured or services rendered.

Sales to one major communications equipment customer accounted for 10.2% of
consolidated sales in 2001 and a different customer accounted for 15.2% of
consolidated sales in 2000. No customers accounted for more than 10% of sales in
1999.

F-23

ALLEN TELECOM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 9: ACQUISITIONS AND DISPOSITIONS

In 1999, the Company acquired the remaining outstanding 26% minority
interest in Mikom G.m.b.H., bringing its ownership interest to 100%, together
with most of the shares in two related European entities. Total consideration
was approximately $17,556,000, including $9,290,000 and $6,173,000 paid in cash,
in 1999 and 2000, respectively, and the balance paid, in cash, in 2001 (included
in Accounts Payable at December 31, 2000).

In 2000, the Company acquired the remaining outstanding 28% minority
interest of Telia, bringing its ownership interest to 100%, for a cash payment
of $2,193,000.

On December 18, 2001, the Company acquired substantially all of the assets
and certain liabilities of Bartley R.F. Systems, Inc. ("Bartley"). Bartley
designs and manufactures radio frequency (RF) filters, filter related subsystems
and other wireless communications infrastructure products principally for
wireless OEM's. The combination of the Company's Forem division, a leading
manufacturer of base station subsystems and components and Bartley is expected
to substantially increase the Company's market share in the United States in the
Company's Base Station Subsystems and Components product line. The results of
Bartley's operations (insignificant from the date of acquisition for 2001) will
be included in the consolidated financial statements beginning January 1, 2002.

The aggregate purchase price was approximately $23,900,000 including
$3,667,000 in cash (including $3,160,000 for the repayment of debt, $380,000 in
purchase price and related costs of acquisition) and common stock valued at
$20,233,000. The value of the 2,271,391 common shares was determined based on
the average market price of the Company's shares over a 5-day period before and
after the terms of the acquisition were agreed to and announced.

The following table summarizes the estimated fair values of the assets
acquired and liabilities assumed at the date of acquisition. The Company is in
process of obtaining third-party valuations of certain intangible assets; thus,
the allocation of the purchase price (and amount of currently recorded goodwill)
is subject to refinement (amounts in thousands):

Current Assets.............................................. $ 9,839
Property, plant and equipment............................... 1,266
Goodwill.................................................... 20,086
-------
Total assets acquired.................................. 31,191
-------
Current Liabilities......................................... (6,371)
Long-term debt.............................................. (920)
-------
Total liabilities assumed.............................. (7,291)
-------
Net assets acquired.................................... $23,900
=======

The amount of the goodwill was assigned to the wireless communications
equipment segment, all of which is expected to be tax deductible.

F-24

ALLEN TELECOM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following supplemental information is presented, on a pro forma basis,
for the consolidated results of operations of the Company for fiscal years 2000
and 2001 as though the business combination of Bartley had been completed at the
beginning of fiscal year 2000 (amounts in thousands, except per share data):

2000 2001
-------- --------

Sales.................................................. $437,857 $435,426
Income (loss) from continuing operations............... $ 9,356 $ (3,590)
Earnings (loss) per common share from continuing
operations (Basic and Diluted)....................... $ 0.31 $ (0.12)

In the preparation of such pro forma information, goodwill was assumed to
be amortizable over a 10-year period resulting in $2,009,000 of goodwill
amortization (or $1,246,000 after related income tax effect), in accordance with
the then existing accounting rules and requirements.

On March 1, 1999, the Company sold its Marta Technologies, Inc. ("Marta")
subsidiary, which operated its discontinued centralized automotive emission
testing business. Previously contingent purchase price in the amount of
$2,000,000 was earned, when, in February 2000, the purchaser was awarded an
emissions testing contract. The additional purchase price consideration was in
the form of a 12% installment note. Accordingly, in the first quarter of 2000,
the Company reported additional gain of $1,300,000 from disposal of discontinued
operations, net of related income taxes of $700,000. The gain on sale of this
discontinued operation in 1999, in the amount of $2,363,000, is net of related
income taxes in the amount of $1,403,000.

NOTE 10: FAIR VALUES OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments.

Cash and Short-Term Investments: The carrying amount reported in the
balance sheet for cash and cash equivalents approximates its fair value.

Long-Term Investments: It is not practicable to estimate the fair value of
the Company's 8% investment in the common and preferred stock of its former
specialty rubber products business because of the lack of quoted market prices
and the inability to estimate fair value without incurring excessive costs.
However, management believes that the carrying amounts recorded at December 31,
2000 and December 31, 2001 reflect the corresponding fair value of such
investment.

Long-Term Debt: The fair values of the Company's long-term debt either
approximate fair value or are estimated using discounted cash flow analysis
based on the Company's current incremental borrowing rates for similar types of
borrowing arrangements.

Off-Balance Sheet Instruments: The Company utilizes letters of credit to
back certain financing instruments, insurance policies and payment obligations.
The letters of credit reflect fair value as a condition of their underlying
purpose and are subject to fees competitively determined. The Company enters
into foreign currency contracts to offset the impact of currency rate changes
related to accounts receivable and certain payment obligations. The fair value
of such contracts are based on quoted market

F-25

ALLEN TELECOM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

prices of comparable contracts. The carrying amounts and fair values of
financial instruments at December 31, 2000 and 2001 are as follows (amounts in
thousands):

CARRYING AMOUNT FAIR VALUE
------------------- -------------------
2000 2001 2000 2001
-------- -------- -------- --------

Cash and cash equivalents.................. $ 10,539 $ 16,368 $ 10,539 $ 16,368
Non-current investments.................... 4,344 4,344 4,344 4,344
Long-term debt............................. 139,421 153,899 141,885 158,809
Off-balance sheet financial instruments:
Letters of credit........................ 1,115 2,115 1,115 2,115
Foreign currency contracts............... 2,773 2,330 2,966 2,373

NOTE 11: SUPPLEMENTAL CASH FLOW DISCLOSURE

The following non-cash items were effected and are not reflected in the
Consolidated Statements of Cash Flows:

In 1999, the Company purchased the remaining outstanding interest in Mikom
and two affiliated European companies. This acquisition resulted in additional
Goodwill of $9,608,000. This acquisition also increased Accounts Payables at
December 31, 1999 by $8,266,000 and eliminated minority interest liability of
$6,500,000.

In 1999, the Company sold Marta assets of $22,958,000 and, further, the
purchaser assumed a $12,436,000 capital lease obligation. As described in Note
9, in 2000 the Company received a $2,000,000 installment note receivable
relating to the sale of Marta.

In 2001, Accumulated other comprehensive loss, representing adjustments
from translating foreign currency financial statements and an adjustment to
reflect minimum pension liabilities, decreased from $31,948,000 at December 31,
2000 to $30,671,000 at December 31, 2001. In 2001, the minimum pension liability
was $2,664,000 (net of related income tax effect) and was none in 2000. The
translation loss decreased from $31,984,000 at December 31, 2000 to $28,052,000
at December 31, 2001. In 2000, such loss, representing adjustments from
translating foreign currency financial statements, increased from $10,685,000 at
December 31, 1999 to $31,948,000 at December 31, 2000.

As more fully described in Note 9, in December 2001 the Company acquired
substantially all of the assets of Bartley R.F. Systems, Inc., in exchange for,
in part, 2,271,391 shares of the Company's common stock valued at approximately
$20,233,000.

Information with respect to cash paid during the year for interest and
taxes is as follows (amounts in thousands):

1999 2000 2001
------ ------- -------

Interest paid.................................... $9,240 $10,620 $11,005
Income taxes paid, net........................... 8,605 10,207 3,664

F-26

ALLEN TELECOM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 12: SPECIAL CHARGES

In 1999, 2000 and 2001, the Company incurred net special charges pertaining
to the discontinuation of certain product lines, the closing and consolidation
of manufacturing facilities and other items. Such costs are included in the
Consolidated Statements of Operations as follows (amounts in thousands):

1999 2000 2001
------- ----- ------

Cost of sales...................................... $ 6,109 $ 106 $ 997
Selling, general and administrative expenses....... 5,877 (141) 1,308
Research and development and product engineering
costs............................................ 325 -- --
------- ----- ------
Total (income) loss........................... $12,311 $ (35) $2,305
======= ===== ======

In 1999, the Company incurred special charges of $12,311,000 (or $0.29 per
basic and diluted share after related income tax effect) relating to the closure
of a manufacturing facility, a loss on the sale of this facility, the
termination of substantially all employees in such facility, a loss on the
disposal of equipment and inventory related charges of $4,690,000 all in the
Wireless Communications Equipment segment. The facility had a net book value of
$4,805,000 at December 31, 2000, classified in other assets, and was sold in
2001.

In 2000, the Company incurred additional pretax charges of $1,678,000, or
$0.04 per basic and diluted share after related income tax effect, incremental
to the 1999 restructuring charge. These 2000 charges, which were not accruable
at December 31, 1999, include termination costs of employees notified subsequent
to December 31, 1999, relocation costs, asset write-offs, and other termination
related benefits. In 2000, the Company also recognized a non-cash pretax gain of
$1,160,000, or $0.03 per basic and diluted share after related income tax
effect, with respect to a pension curtailment gain as a result of a reduction in
workforce in connection with the aforementioned restructuring. The Company also
adjusted the loss accrual for the disposal of the facility as a result of its
sale in January 2001 and recorded income in the amount of $553,000, or $0.01 per
basic and diluted share after related income tax effect.

In 2001, the Company incurred pretax charges of $2,305,000 or $.05 per
basic and diluted share after related income tax effect, with respect to the
planned closing and consolidation of the Company's U.S. base station subsystem
and components parts manufacturing facility in Nevada into the newly acquired
Bartley manufacturing facility in Massachusetts. These costs include termination
costs of substantially all employees at the Nevada manufacturing facility of
$570,000, closedown costs of the manufacturing facility of $744,000, a loss on
assets, principally relating to disposal of equipment, of $591,000 and inventory
related charges of $400,000.

F-27

ALLEN TELECOM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following is a summary of the status of certain exit costs incurred
(amounts in thousands, except employee data):

SEVERANCE
------------------- DISPOSITION
NUMBER OF OF BUILDING
ACCRUAL EMPLOYEES AND EQUIPMENT OTHER
------- --------- ------------- -------

Accrual................................... $ 1,531 115 $ 3,764 $ 1,110
Charged against accrual................... (157) (22) (1,493) (593)
------- --- ------- -------
Balance, December 31, 1999................ 1,374 93 2,271 517
Additions to the accrual.................. 327 5 393 958
Charged against accrual................... (1,482) (98) (562) (1,158)
Accrual adjustment credited to income..... -- -- (553) --
------- --- ------- -------
Balance, December 31, 2000................ 219 -- 1,549 317
Additions to the accrual.................. 570 76 576 168
Charged against accrual................... (219) -- (1,524) (147)
------- --- ------- -------
Balance, December 31, 2001................ $ 570 76 $ 601 $ 338
======= === ======= =======

NOTE 13: UNAUDITED QUARTERLY FINANCIAL DATA

Quarterly financial data are summarized as follows (amounts in thousands,
except per share amounts):

MARCH 31 JUNE 30 SEPT. 30 DEC. 31
-------- -------- -------- --------

2000
Sales...................................... $ 88,859 $ 89,175 $107,690 $106,884
Gross profit............................... 25,382 27,584 31,930 30,046
Income from continuing operations.......... 570 2,242 4,285 3,656
Gain from discontinued operations.......... 1,300 -- -- --
Net income................................. 1,870 2,242 4,285 3,656
Earnings per common share:
Basic and Diluted:
Continuing operations................. $ 0.02 $ 0.08 $ 0.15 $ 0.13
Discontinued operations............... 0.05 -- -- --
Net income............................ 0.07 0.08 0.15 0.13
2001
Sales...................................... $108,543 $105,094 $ 91,319 $ 89,645
Gross profit............................... 29,904 27,111 21,442 19,802
Net income (loss).......................... 2,437 846 (1,662) (3,444)
Earnings (loss) per common share:
Basic and Diluted:
Net income (loss)..................... $ 0.09 $ 0.03 $ (0.06) $ (0.12)

In the first quarter of 2000, the Company incurred incremental pretax
charges of approximately $1,678,000, or $0.04 per basic and diluted share after
related income tax effect, in connection with the restructuring, announced
during the fourth quarter of 1999, of certain operations including the
discontinuance of certain product lines, the closing of a manufacturing
facility, termination costs of

F-28

ALLEN TELECOM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

employees and other items. Of this pretax charge, $960,000 was recorded in cost
of sales and $718,000 in selling, general and administrative expenses.

In the third quarter of 2000, the Company recognized a pretax gain of
approximately $1,160,000, or $0.03 per basic and diluted share after related
income tax effect, with respect to a pension curtailment gain as a result of a
reduction in force in connection with the aforementioned restructuring, of this
gain $406,000 was recorded in cost of sales and $754,000 in selling, general and
administrative expenses.

In the fourth quarter of 2000, the Company adjusted the loss accrual for
the disposal of a facility and recorded income in the amount of $553,000
(included in cost of sales) or $0.01, per basic and diluted share, after related
income tax effect.

In the fourth quarter of 2001, the Company recognized a restructuring
charge of approximately $2,305,000, or $0.05 per basic and diluted share after
related income tax effect, with respect to the closing and consolidation of the
Company's U.S. base station subsystem and components parts manufacturing
facility in Nevada into the newly acquired Bartley manufacturing facility in
Massachusetts. Of this cost, approximately $997,000 is included in cost of sales
and $1,308,000 in selling, general and administrative expense.

NOTE 14: SUBSEQUENT EVENT

On February 13, 2002, the Company announced that it had filed a
Registration Statement with the Securities and Exchange Commission to register
1,000,000 shares of its Series D Convertible Preferred Stock (liquidation
preference $50.00 per share), with an aggregate offering price of $50,000,000.
The Registration Statement also covers the additional shares to be issued if the
underwriters exercise the over-allotment option to purchase up to an additional
150,000 shares.

F-29

------------------------------------------------------
------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST
NOT RELY ON ANY UNAUTHORIZED INFORMATION OR REPRESENTATIONS. THIS PROSPECTUS IS
AN OFFER TO SELL ONLY THE SECURITIES OFFERED HEREBY, BUT ONLY UNDER
CIRCUMSTANCES AND IN JURISDICTIONS WHERE IT IS LAWFUL TO DO SO. THE INFORMATION
CONTAINED IN THIS PROSPECTUS IS CURRENT ONLY AS OF ITS DATE.

-------------------------------
TABLE OF CONTENTS
-------------------------------

PAGE
----

Prospectus Summary..................... 1
Risk Factors........................... 12
Special Note Regarding Forward-Looking
Statements........................... 26
Use of Proceeds........................ 27
Price Range of Our Common Stock........ 27
Dividend Policy........................ 28
Capitalization......................... 29
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 30
Business............................... 42
Management............................. 55
Principal Stockholders................. 58
Description of the Convertible
Preferred Stock...................... 59
Description of Certain Indebtedness and
Capital Stock........................ 73
Certain United States Federal Income
Tax Considerations................... 76
Underwriting........................... 83
Where You Can Find More Information.... 84
Incorporation of Certain Documents by
Reference............................ 85
Legal Matters.......................... 85
Experts................................ 85
Index to Consolidated Financial
Statements........................... F-1

------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
1,000,000 SHARES

[ALLEN TELECOM LOGO]
ALLEN TELECOM INC.
SERIES D %
CONVERTIBLE
PREFERRED STOCK

(LIQUIDATION PREFERENCE
$50.00 PER SHARE)
------------------------
PROSPECTUS
------------------------
BEAR, STEARNS & CO. INC.
------------------------------------------

MCDONALD INVESTMENTS INC.

A.G. EDWARDS & SONS, INC.

NEEDHAM & COMPANY, INC.

H.C. WAINWRIGHT & CO., INC.
, 2002
------------------------------------------------------
------------------------------------------------------

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following sets forth the estimated expenses to be incurred by Allen
Telecom in connection with the offering described in this registration
statement, other than underwriting discounts and commissions.

Securities and Exchange Commission registration fee......... $10,135
NASD fee.................................................... 11,515
NYSE listing fee............................................
Printing costs.............................................. *
Accounting fees and expenses................................ *
Legal fees and expenses (including Blue Sky)................ *
Miscellaneous............................................... *
-------
Total.................................................. $
=======

---------------
* Reflects estimates made by Allen Telecom.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Set forth below is a description of certain provisions of the second
restated certificate of incorporation of Allen Telecom, the amended and restated
by-laws of Allen Telecom, and the Delaware General Corporation Law. This
description is intended as a summary only and is qualified in its entirety by
reference to the Allen Telecom certificate of incorporation, the Allen Telecom
by-laws, and Delaware law.

ELIMINATION OF LIABILITY IN CERTAIN CIRCUMSTANCES. The Allen Telecom
certificate of incorporation provides that, to the full extent provided by
Delaware law, a director will not be personally liable to Allen Telecom or its
stockholders for monetary damages for or with respect to any acts or omissions
in the performance of his or her duties as a director except for liability: (i)
for any breach of the director's duty of loyalty to such corporation or its
stockholders; (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law; (iii) for paying a
dividend or approving a stock repurchase in violation of Section 174 of the
Delaware General Corporation Law; or (iv) for any transaction from which the
director derived an improper personal benefit.

While Article Seventh of the Allen Telecom certificate of incorporation
provides directors with protection from awards for monetary damages for breaches
of the duty of care, it does not eliminate the directors' duty of care.
Accordingly, Article Seventh will have no effect on the availability of
equitable remedies such as an injunction or rescission based on a director's
breach of the duty of care. The provisions of Article Seventh as described in
the previous paragraph apply to officers of Allen Telecom only if they are
directors of Allen Telecom and are acting in their capacity as directors, and do
not apply to officers of Allen Telecom who are not directors.

INDEMNIFICATION AND INSURANCE. Under Delaware law, directors and officers
as well as other employees and individuals may be indemnified against expenses
(including attorneys' fees), judgments, fines, and amounts paid in settlement in
connection with specified actions, suits, or proceedings, whether civil,
criminal, administrative, or investigative (other than an action by or in the
right of the corporation as a derivative action) if they acted in good faith and
in a manner they reasonably believed to be in or not opposed to the best
interest of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful.

Article Seventh of the Allen Telecom certificate of incorporation and
Article VI of the Allen Telecom by-laws provide to directors, officers,
employees and agents of Allen Telecom, indemnification to the full extent
provided by Delaware law. Article VI of the Allen Telecom by-laws also provides
that expenses incurred by a person in defending a civil, criminal,
administrative or investigative action, suit or

II-1

proceeding, or threat thereof, by reason of the fact that he or she is or was a
director or officer may be paid in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf of
such director or officer to repay such amount if it is ultimately determined
that he or she is not entitled to be indemnified by Allen Telecom as authorized
by relevant Delaware law. Allen Telecom has obtained directors and officers
liability insurance providing coverage to its directors and officers.

At the time of the election of an officer or director of Allen Telecom, the
board of directors of Allen Telecom adopts resolutions authorizing Allen Telecom
to enter into an indemnification agreement with such officer or director. Allen
Telecom has entered into an indemnification agreement with each of its officers
and directors.

One of the purposes of the indemnification agreements is to attempt to
specify the extent to which persons entitled to indemnification thereunder may
receive indemnification under circumstances in which indemnity would not
otherwise be provided by Delaware law. Pursuant to the indemnification
agreements and subject to specified conditions provided in these agreements, an
indemnitee is entitled to indemnification as provided by Section 145 of the
Delaware General Corporation Law and to indemnification for any amount which the
indemnitee is or becomes legally obligated to pay relating to or arising out of
any claim made against that person because of that person's position as an
employee, director or agent of Allen Telecom. An indemnitee, however, will not
be entitled to indemnification in connection with specified claims initiated by
the indemnitee prior to a change in control unless the board of directors of
Allen Telecom first authorizes or consents to the initiation of the claim by the
indemnitee. The indemnification agreements are in addition to and are not
intended to limit any rights of indemnification that are available under the
Allen Telecom certificate of incorporation or the Allen Telecom by-laws, any
policy of insurance or otherwise.

In addition to the rights to indemnification specified therein, the
indemnification agreements are intended to increase the certainty of receipt by
the indemnitee of the benefits to which he or she is entitled by providing
specific procedures relating to indemnification.

The indemnification agreements are also intended to provide increased
assurance of indemnification against any amendment to the Allen Telecom by-laws
that would have the effect of denying, diminishing or encumbering the
indemnitee's rights pursuant thereto or to Delaware law or any other law as
applied to any act or failure to act occurring in whole or in part prior to the
effective date of such amendment.

Insofar as indemnification arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its legal counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

II-2

ITEM 16. EXHIBITS.

EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------

1.1* Form of Underwriting Agreement
4.1* Form of Certificate of Designation for the Series D %
Convertible Preferred Stock
5.1* Opinion of Jones, Day, Reavis & Pogue
12.1 Statement Regarding Computation of Ratio of Earnings to
Combined Fixed Charges and Preferred Stock Dividends
23.1* Consent of Jones, Day, Reavis & Pogue (included in Exhibit
5.1)
23.2 Consent of Deloitte & Touche LLP
24.1 Powers of Attorney of Directors and Officers of Allen
Telecom Inc.

---------------
* To be filed by amendment

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.

(ii) To reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement. Notwithstanding the foregoing, any
increase or decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this registration statement
or any material change to such information in this registration
statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

The undersigned registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
an initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or

II-3

otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the city of Beachwood, State of Ohio, on February 28, 2002.

ALLEN TELECOM INC.

By: /s/ LAURA C. MEAGHER
------------------------------------
LAURA C. MEAGHER
General Counsel and Secretary

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

/s/ ROBERT G. PAUL President, Chief Executive February 28, 2002
--------------------------------------------------- Officer and Director
Robert G. Paul (Principal Executive Officer)

/s/ ROBERT A. YOUDELMAN Executive Vice President and February 28, 2002
--------------------------------------------------- Chief Financial Officer
Robert A. Youdelman (Principal Financial Officer)

* Vice President -- Finance February 28, 2002
--------------------------------------------------- (Principal Accounting Officer)
James L. LePorte, III

* Chairman of the Board and February 28, 2002
--------------------------------------------------- Director
Philip Wm. Colburn

* Vice Chairman of the Board and February 28, 2002
--------------------------------------------------- Director
J. Chisholm Lyons

* Director February 28, 2002
---------------------------------------------------
Sheldon I. Ausman

* Director February 28, 2002
---------------------------------------------------
John F. McNiff

* Director February 28, 2002
---------------------------------------------------
Charles W. Robinson

* Director February 28, 2002
---------------------------------------------------
Martyn F. Roetter

* Director February 28, 2002
---------------------------------------------------
Gary B. Smith

* Director February 28, 2002
---------------------------------------------------
Kathleen M. H. Wallman

II-5

---------------

* The undersigned, by signing his or her name hereto, does sign and execute this
registration statement pursuant to the powers of attorney executed by the
above-named officers and directors of the registrant, which are being filed
herewith with the Securities and Exchange Commission on behalf of such
officers and directors.

By: /s/ LAURA C. MEAGHER
--------------------------------------------------------

Laura C. Meagher

II-6

EXHIBIT INDEX

EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
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* To be filed by amendment