SUWANEE, Ga., Feb. 9, 2011 /PRNewswire/ -- ARRIS Group, Inc.
(Nasdaq: ARRS), today announced preliminary and unaudited financial
results for the fourth quarter and full year 2010.
Revenues in the fourth quarter 2010 were $266.2 million as compared to fourth quarter 2009
revenues of $300.0 million, and as
compared to third quarter 2010 revenues of $274.3 million. Full year 2010 and 2009
revenues were $1,087.5 million and
$1,107.8 million, respectively.
Adjusted net income (a non-GAAP measure) in the fourth quarter
2010 was $0.19 per diluted share,
compared to $0.32 per diluted share
for the fourth quarter 2009 and $0.19
per diluted share for the third quarter of 2010. In the
fourth quarter 2010, the Company recognized approximately
$0.03 per diluted share of full year
benefit associated with Congress passing the R&D tax credit
legislation in late December. Adjusted net income was
$0.85 per diluted share for the full
year 2010 and compares to $1.01 per
diluted share for the full year 2009.
GAAP net income in the fourth quarter 2010 was $0.09 per diluted share, as compared to fourth
quarter 2009 GAAP net income of $0.26
per diluted share and third quarter 2010 GAAP net income of
$0.11 per diluted share. Full year
2010 GAAP net income was $0.50 per
diluted share as compared to $0.71
per diluted share in 2009. Significant GAAP items that have been
excluded in computing adjusted net income and adjusted net income
per diluted share include amortization of intangible assets, equity
compensation, non-cash interest expense, restructuring charges, and
certain discrete tax items. A reconciliation of adjusted net income
to GAAP net income per diluted share is attached to this release
and also can be found on the Company's website
(www.arrisi.com).
Gross margin for the fourth quarter 2010 was 36.2%, which
compares to the fourth quarter 2009 gross margin of 44.8% and the
third quarter 2010 gross margin of 37.2%. Year over year
margin decline was the result of a shift in product mix.
The Company ended the fourth quarter 2010 with $620.1 million of cash, cash equivalents and
short-term investments, as compared to $625.6 million at the end of the fourth quarter
2009 and $640.4 million at the end of
the third quarter 2010. However, during the fourth quarter the
Company used $30 million to
repurchase 2.9 million shares of its common stock and $5 million to repurchase convertible notes.
During 2010, the Company used a total of $92.6 million to repurchase 6.8 million shares of
its common stock and $24 million in
face value of convertible notes. The Company generated
$22.6 million of cash from operating
activities during the fourth quarter 2010 and $118.5 million during the full year 2010, which
compares to $69.8 million and
$241.0 million during the same
periods in 2009.
Order backlog at the end of the fourth quarter 2010 was
$140.4 million as compared to
$144.4 million and $119.6 million at the end of the fourth quarter
2009 and the third quarter 2010, respectively. The Company's
book-to-bill ratio in the fourth quarter 2010 was 1.08 as compared
to the fourth quarter 2009 of 0.92 and the third quarter 2010 of
0.80.
"Fourth quarter financial results closed in line with our
expectations and we continued to strengthen our balance sheet
during the quarter," said Bob
Stanzione, ARRIS Chairman & CEO. "ARRIS continues to
invest aggressively in new IP based video products as the industry
moves towards a convergence of conventional TV and IP based TV.
In the meantime, internet traffic continues to grow, which
will create ongoing demand for both our existing and new products
as well."
During the quarter the Company announced its highly-anticipated
downstream module upgrade, significantly increasing the downstream
density of the DOCSIS(R) 3.0 C4 CMTS. DOCSIS 3.0 was
introduced initially in 2008 on the C4 CMTS with a 16 downstream
channel single slot Cable Access Module (CAM). With this second
generation DOCSIS 3.0 capability, the capacity of the 16D CAMs can
be increased to 32 Annex B or 24 Annex A downstream channels.
"We are off to a good start in 2011. With respect to the
first quarter 2011, we now project that revenues for the Company
will be in the range of $260 to $280
million, with adjusted net income per diluted share in the
range of $0.14 to $0.18 and GAAP net
income per diluted share in the range of $0.05 to $0.09," said David Potts, ARRIS EVP & CFO.
ARRIS management will conduct a conference call at 5:00 pm EST, today, Wednesday, February 9, 2011, to discuss these
results in detail. You may participate in this conference
call by dialing 888-713-4216 or 617-213-4868 for international
calls prior to the start of the call and providing the ARRIS Group,
Inc. name, conference pass code 34755339 and Jim Bauer as the moderator. Please note
that ARRIS will not accept any calls related to this earnings
release until after the conclusion of the 5:00 pm EST conference call. A replay of
the conference call can be accessed approximately two hours after
the call through Monday, February 14,
2011 by dialing 888-286-8010 or 617-801-6888 for
international calls and using the pass code 35140408. A
replay also will be made available for a period of 12 months
following the conference call on ARRIS' website at
www.arrisi.com.
About ARRIS
ARRIS is a global communications technology company specializing
in the design, engineering and supply of technology supporting
triple- and quad-play broadband services for residential and
business customers around the world. The company supplies broadband
operators with the tools and platforms they need to deliver
converged IP video solutions, carrier-grade telephony, demand
driven video, next-generation advertising, network and workforce
management solutions, access and transport architectures and ultra
high-speed data services. Headquartered in Suwanee, Georgia, USA, ARRIS has R&D
centers in Suwanee, GA;
Beaverton, OR; Chicago, IL; Kirkland, WA; State
College, PA; Wallingford,
CT; Waltham, MA;
Cork, Ireland; and Shenzhen, China, and operates support and
sales offices throughout the world. Information about ARRIS
products and services can be found at www.arrisi.com.
Forward-looking statements:
Statements made in this press release, including those related
to:
- growth expectations and business prospects;
- revenues and net income for the first quarter 2011, full year
2011, and beyond;
- expected sales levels and acceptance of new ARRIS products;
and
- the general market outlook and industry trends
are forward-looking statements. These statements involve risks
and uncertainties that may cause actual results to differ
materially from those set forth in these statements. Among
other things,
- projected results for the first quarter as well as the general
outlook for 2011 and beyond are based on preliminary estimates,
assumptions and projections that management believes to be
reasonable at this time, but are beyond management's control;
- ARRIS' customers operate in a capital intensive consumer based
industry, and the current volatility in the capital markets or
changes in customer spending may adversely impact their ability or
willingness to purchase the products that the Company offers;
and
- because the market in which ARRIS operates is volatile, actions
taken and contemplated may not achieve the desired impact relative
to changing market conditions and the success of these strategies
will be dependent on the effective implementation of those plans
while minimizing organizational disruption.
In addition to the factors set forth elsewhere in this release,
other factors that could cause results to differ materially from
current expectations include: the uncertain current economic
climate and its impact on our customers' plans and access to
capital; the impact of rapidly changing technologies; the impact of
competition on product development and pricing; the ability of
ARRIS to react to changes in general industry and market conditions
including regulatory developments; rights to intellectual property,
market trends and the adoption of industry standards; and
consolidations within the telecommunications industry of both the
customer and supplier base. These factors are not intended to
be an all-encompassing list of risks and uncertainties that may
affect the Company's business. Additional information regarding
these and other factors can be found in ARRIS' reports filed with
the Securities and Exchange Commission, including its Form 10-Q for
the quarter ended September 30, 2010.
In providing forward-looking statements, the Company
expressly disclaims any obligation to update publicly or otherwise
these statements, whether as a result of new information, future
events or otherwise.
ARRIS GROUP,
INC.
|
|
PRELIMINARY
CONSOLIDATED BALANCE SHEETS
|
|
(in
thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
September
30,
|
|
June
30,
|
|
March
31,
|
|
December
31,
|
|
|
|
2010
|
|
2010
|
|
2010
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
353,121
|
|
$
351,894
|
|
$
370,932
|
|
$
500,044
|
|
$
500,565
|
|
Short-term investments, at
fair value
|
|
266,981
|
|
288,463
|
|
292,421
|
|
161,012
|
|
125,031
|
|
Total cash, cash
equivalents and short term investments
|
|
620,102
|
|
640,357
|
|
663,353
|
|
661,056
|
|
625,596
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted cash
|
|
4,937
|
|
4,480
|
|
4,478
|
|
4,476
|
|
4,475
|
|
Accounts receivable,
net
|
|
125,933
|
|
133,915
|
|
139,673
|
|
139,207
|
|
143,708
|
|
Other
receivables
|
|
6,528
|
|
2,654
|
|
6,368
|
|
3,057
|
|
6,113
|
|
Inventories,
net
|
|
101,763
|
|
89,203
|
|
78,830
|
|
79,907
|
|
95,851
|
|
Prepaids
|
|
9,237
|
|
8,934
|
|
10,196
|
|
10,546
|
|
11,675
|
|
Current deferred income
tax assets
|
|
19,819
|
|
28,585
|
|
30,469
|
|
37,324
|
|
35,994
|
|
Income taxes
recoverable
|
|
21,907
|
|
17,094
|
|
5,943
|
|
-
|
|
3,106
|
|
Other current
assets
|
|
11,147
|
|
11,253
|
|
15,386
|
|
14,328
|
|
15,790
|
|
Total current
assets
|
|
921,373
|
|
936,475
|
|
954,696
|
|
949,901
|
|
942,308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment,
net
|
|
56,306
|
|
56,816
|
|
56,128
|
|
56,223
|
|
57,195
|
|
Goodwill
|
|
234,963
|
|
235,109
|
|
235,122
|
|
235,256
|
|
235,388
|
|
Intangible assets,
net
|
|
168,616
|
|
177,560
|
|
186,529
|
|
195,551
|
|
204,572
|
|
Investments
|
|
31,015
|
|
29,591
|
|
29,485
|
|
25,435
|
|
20,618
|
|
Noncurrent deferred income tax
assets
|
|
6,294
|
|
6,560
|
|
6,127
|
|
6,298
|
|
6,759
|
|
Other assets
|
|
5,520
|
|
6,129
|
|
6,755
|
|
8,050
|
|
8,776
|
|
|
|
$
1,424,087
|
|
$
1,448,240
|
|
$
1,474,842
|
|
$
1,476,714
|
|
$
1,475,616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
50,736
|
|
$
52,011
|
|
$
72,652
|
|
$
44,523
|
|
$
53,979
|
|
Accrued compensation,
benefits and related taxes
|
|
28,778
|
|
25,913
|
|
20,696
|
|
23,639
|
|
36,936
|
|
Accrued
warranty
|
|
2,945
|
|
3,504
|
|
3,539
|
|
3,632
|
|
4,265
|
|
Deferred
revenue
|
|
31,625
|
|
36,029
|
|
44,913
|
|
53,024
|
|
47,044
|
|
Current portion of
long-term debt
|
|
-
|
|
12
|
|
50
|
|
87
|
|
124
|
|
Current deferred income
tax liability
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Other accrued
liabilities
|
|
18,847
|
|
25,891
|
|
24,476
|
|
42,978
|
|
46,203
|
|
Total current
liabilities
|
|
132,931
|
|
143,360
|
|
166,326
|
|
167,883
|
|
188,551
|
|
Long-term debt, net of current
portion
|
|
202,615
|
|
204,053
|
|
212,914
|
|
214,131
|
|
211,248
|
|
Accrued pension
|
|
17,213
|
|
17,383
|
|
17,058
|
|
16,733
|
|
16,408
|
|
Noncurrent income taxes
payable
|
|
17,702
|
|
16,509
|
|
16,523
|
|
16,248
|
|
14,815
|
|
Noncurrent deferred income tax
liabilities
|
|
29,151
|
|
32,193
|
|
28,705
|
|
33,577
|
|
37,204
|
|
Other noncurrent
liabilities
|
|
15,406
|
|
14,926
|
|
15,704
|
|
16,871
|
|
16,021
|
|
Total
liabilities
|
|
415,018
|
|
428,424
|
|
457,230
|
|
465,443
|
|
484,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Common stock
|
|
1,409
|
|
1,406
|
|
1,405
|
|
1,402
|
|
1,388
|
|
Capital in excess of par
value
|
|
1,206,157
|
|
1,199,184
|
|
1,194,829
|
|
1,187,854
|
|
1,183,872
|
|
Treasury stock at
cost
|
|
(145,286)
|
|
(115,248)
|
|
(99,645)
|
|
(79,019)
|
|
(75,960)
|
|
Unrealized gain (loss) on
marketable securities
|
|
392
|
|
(374)
|
|
217
|
|
2
|
|
28
|
|
Unfunded pension
liability
|
|
(5,813)
|
|
(6,041)
|
|
(6,041)
|
|
(6,041)
|
|
(6,041)
|
|
Accumulated
deficit
|
|
(47,606)
|
|
(58,927)
|
|
(72,969)
|
|
(92,743)
|
|
(111,734)
|
|
Cumulative translation
adjustments
|
|
(184)
|
|
(184)
|
|
(184)
|
|
(184)
|
|
(184)
|
|
Total stockholders'
equity
|
|
1,009,069
|
|
1,019,816
|
|
1,017,612
|
|
1,011,271
|
|
991,369
|
|
|
|
$
1,424,087
|
|
$
1,448,240
|
|
$
1,474,842
|
|
$
1,476,714
|
|
$
1,475,616
|
|
|
|
|
|
|
|
|
|
|
|
|
ARRIS GROUP,
INC.
|
|
PRELIMINARY
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
Three Months
Ended December
31,
|
|
For the
Twelve Months
Ended December
31,
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
266,168
|
|
$
299,995
|
|
$
1,087,506
|
|
$
1,107,806
|
|
Cost of sales
|
169,855
|
|
165,495
|
|
663,417
|
|
645,043
|
|
Gross margin
|
96,313
|
|
134,500
|
|
424,089
|
|
462,763
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative expenses
|
34,205
|
|
37,622
|
|
137,694
|
|
148,403
|
|
Research and development
expenses
|
35,427
|
|
35,102
|
|
140,468
|
|
124,550
|
|
Restructuring
charges
|
(8)
|
|
2,917
|
|
65
|
|
3,702
|
|
Amortization of intangible
assets
|
8,944
|
|
9,554
|
|
35,957
|
|
37,361
|
|
|
78,568
|
|
85,195
|
|
314,184
|
|
314,016
|
|
Operating income
|
17,745
|
|
49,305
|
|
109,905
|
|
148,747
|
|
Other expense
(income):
|
|
|
|
|
|
|
|
|
Interest
expense
|
4,237
|
|
4,549
|
|
17,965
|
|
17,670
|
|
Gain on
investments
|
(13)
|
|
(258)
|
|
(414)
|
|
(711)
|
|
Loss (gain) on foreign
currency
|
(327)
|
|
(198)
|
|
(44)
|
|
3,445
|
|
Interest income
|
(528)
|
|
(237)
|
|
(1,997)
|
|
(1,409)
|
|
Loss (gain) on debt
retirement
|
5
|
|
-
|
|
(373)
|
|
(4,152)
|
|
Other (income) expense,
net
|
31
|
|
174
|
|
138
|
|
(714)
|
|
Income from continuing
operations before income taxes
|
14,340
|
|
45,275
|
|
94,630
|
|
134,618
|
|
Income tax
expense
|
3,019
|
|
11,996
|
|
30,502
|
|
43,849
|
|
Net income
|
$
11,321
|
|
$
33,279
|
|
$
64,128
|
|
$
90,769
|
|
|
|
|
|
|
|
|
|
|
Net income per common
share
|
|
|
|
|
|
|
|
|
Basic
|
$
0.09
|
|
$
0.26
|
|
$
0.51
|
|
$
0.73
|
|
Diluted
|
$
0.09
|
|
$
0.26
|
|
$
0.50
|
|
$
0.71
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares:
|
|
|
|
|
|
|
|
|
Basic
|
122,866
|
|
125,698
|
|
125,157
|
|
124,716
|
|
Diluted
|
125,758
|
|
129,524
|
|
128,271
|
|
128,085
|
|
|
|
|
|
|
|
|
|
ARRIS GROUP,
INC.
|
|
PRELIMINARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(in
thousands)
|
|
|
|
|
|
|
|
For the
Three Months
Ended December
31,
|
|
For the
Twelve Months
Ended December
31,
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Activities:
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
11,321
|
|
$
33,279
|
|
$
64,128
|
|
$
90,769
|
|
|
|
Depreciation
|
|
5,972
|
|
5,492
|
|
22,865
|
|
20,862
|
|
|
|
Amortization of intangible
assets
|
|
8,944
|
|
9,554
|
|
35,957
|
|
37,361
|
|
|
|
Stock compensation
expense
|
|
5,769
|
|
4,207
|
|
21,827
|
|
15,921
|
|
|
|
Deferred income tax provision
(benefit)
|
|
5,483
|
|
(626)
|
|
8,081
|
|
13,052
|
|
|
|
Amortization of deferred finance
fees
|
|
164
|
|
180
|
|
691
|
|
728
|
|
|
|
Provision for doubtful
accounts
|
|
(366)
|
|
(1,281)
|
|
(283)
|
|
(1,280)
|
|
|
|
Gain on investments
|
|
(13)
|
|
(258)
|
|
(414)
|
|
(711)
|
|
|
|
Loss on disposal of fixed
assets
|
|
37
|
|
474
|
|
406
|
|
428
|
|
|
|
Non-cash interest
expense
|
|
2,777
|
|
2,828
|
|
11,325
|
|
11,136
|
|
|
|
Loss (gain) on debt
retirement
|
|
5
|
|
-
|
|
(373)
|
|
(4,152)
|
|
|
|
Excess income tax benefits from
stock-based compensation plans
|
|
(69)
|
|
(980)
|
|
(2,752)
|
|
(3,007)
|
|
|
Changes in operating assets
& liabilities, net of effects of acquisitions and
disposals:
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
8,348
|
|
(19,097)
|
|
18,058
|
|
21,704
|
|
|
|
Other receivables
|
|
(2,819)
|
|
(2,922)
|
|
(59)
|
|
(2,383)
|
|
|
|
Inventory
|
|
(12,560)
|
|
8,457
|
|
(5,912)
|
|
38,906
|
|
|
|
Income taxes
payable/recoverable
|
|
(3,614)
|
|
7,834
|
|
(17,787)
|
|
4,966
|
|
|
|
Accounts payable and accrued
liabilities
|
|
(6,082)
|
|
37,031
|
|
(48,308)
|
|
4,707
|
|
|
|
Other, net
|
|
(729)
|
|
(14,399)
|
|
11,059
|
|
(8,030)
|
|
|
|
|
Net cash provided by operating
activities
|
|
22,568
|
|
69,773
|
|
118,509
|
|
240,977
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities:
|
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant,
and equipment
|
|
(5,518)
|
|
(4,336)
|
|
(22,645)
|
|
(18,663)
|
|
|
Cash paid for acquisition, net
of cash acquired
|
|
(4,000)
|
|
(14,604)
|
|
(4,000)
|
|
(22,734)
|
|
|
Cash proceeds from sale of
property, plant & equipment
|
|
2
|
|
2
|
|
245
|
|
210
|
|
|
Purchases of
investments
|
|
(182,829)
|
|
(64,859)
|
|
(514,376)
|
|
(216,704)
|
|
|
Disposals of
investments
|
|
204,163
|
|
50,072
|
|
364,077
|
|
104,488
|
|
|
|
|
Net cash provided by (used in)
investing activities
|
|
11,818
|
|
(33,725)
|
|
(176,699)
|
|
(153,403)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities:
|
|
|
|
|
|
|
|
|
|
|
Payment of debt
obligations
|
|
(12)
|
|
(37)
|
|
(124)
|
|
(158)
|
|
|
Early redemption of long-term
debt
|
|
(4,956)
|
|
-
|
|
(23,287)
|
|
(10,556)
|
|
|
Repurchase of common
stock
|
|
(30,038)
|
|
-
|
|
(69,326)
|
|
-
|
|
|
Excess income tax benefits from
stock-based compensation plans
|
|
69
|
|
980
|
|
2,752
|
|
3,007
|
|
|
Repurchase of shares to satisfy
employee tax withholdings
|
|
(25)
|
|
-
|
|
(6,447)
|
|
(2,180)
|
|
|
Proceeds from issuance of common
stock
|
|
1,803
|
|
1,779
|
|
7,178
|
|
12,984
|
|
|
|
|
Net cash provided by (used in)
financing activities
|
|
(33,159)
|
|
2,722
|
|
(89,254)
|
|
3,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
and cash equivalents
|
|
1,227
|
|
38,770
|
|
(147,444)
|
|
90,671
|
|
Cash and cash equivalents at
beginning of period
|
|
351,894
|
|
461,795
|
|
500,565
|
|
409,894
|
|
Cash and cash equivalents at end
of period
|
|
$
353,121
|
|
$
500,565
|
|
$
353,121
|
|
$
500,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARRIS GROUP,
INC.
|
|
PRELIMINARY
SUPPLEMENTAL NET INCOME RECONCILIATION
|
|
(in
thousands, except per share data)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4
2010
|
|
Q4
2009
|
|
Year
2010
|
|
Year
2009
|
|
|
|
|
|
Per
Diluted
|
|
|
|
Per
Diluted
|
|
|
|
Per
Diluted
|
|
|
|
Per
Diluted
|
|
|
|
Amount
|
|
Share
|
|
Amount
|
|
Share
|
|
Amount
|
|
Share
|
|
Amount
|
|
Share
|
|
|
Net income
|
$ 11,321
|
|
$
0.09
|
|
$ 33,279
|
|
$
0.26
|
|
$ 64,128
|
|
$
0.50
|
|
$ 90,769
|
|
$
0.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Highlighted items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impacting
gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation
expense
|
492
|
|
-
|
|
383
|
|
0.00
|
|
1,897
|
|
0.01
|
|
1,446
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impacting
operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition costs,
restructuring and other
|
(8)
|
|
-
|
|
2,917
|
|
0.02
|
|
65
|
|
-
|
|
3,977
|
|
0.03
|
|
|
Amortization of intangible
assets
|
8,944
|
|
0.07
|
|
9,554
|
|
0.07
|
|
35,957
|
|
0.28
|
|
37,361
|
|
0.29
|
|
|
Stock compensation
expense
|
5,277
|
|
0.05
|
|
3,824
|
|
0.03
|
|
19,930
|
|
0.15
|
|
14,475
|
|
0.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impacting
other (income) / expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash interest
expense
|
2,777
|
|
0.02
|
|
2,827
|
|
0.02
|
|
11,325
|
|
0.09
|
|
11,135
|
|
0.09
|
|
|
Loss (gain) on retirement
of debt
|
5
|
|
-
|
|
-
|
|
-
|
|
(373)
|
|
-
|
|
(4,152)
|
|
(0.03)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impacting
income tax expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments of income tax
valuation allowances, research & development credits and
other
|
1,058
|
|
0.01
|
|
(4,422)
|
|
(0.03)
|
|
889
|
|
0.01
|
|
(3,133)
|
|
(0.02)
|
|
|
Tax related
to highlighted items above
|
(6,503)
|
|
(0.05)
|
|
(7,375)
|
|
(0.06)
|
|
(24,311)
|
|
(0.19)
|
|
(22,561)
|
|
(0.18)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total highlighted
items
|
12,042
|
|
0.10
|
|
7,708
|
|
0.06
|
|
45,379
|
|
0.35
|
|
38,548
|
|
0.30
|
|
|
Net income excluding highlighted
items
|
$ 23,363
|
|
$
0.19
|
|
$ 40,987
|
|
$
0.32
|
|
$ 109,507
|
|
$
0.85
|
|
$ 129,317
|
|
$
1.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares -
diluted
|
|
|
125,758
|
|
|
|
129,524
|
|
|
|
128,271
|
|
|
|
128,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With respect to stock
compensation expense, ARRIS records non-cash compensation
expense related to grants of options and restricted stock.
Depending upon the size, timing and the terms of the grants,
this non-cash compensation expense may vary significantly.
With respect to amortization of intangibles, the intangibles
being amortized relate to our acquisitions. The acquisition
costs, restructuring, and other reflect items that, although they
or similar items might recur, are of a nature and magnitude that
identifying them separately provides investors with a greater
ability to project ARRIS’ future performance.
With respect to the convertible debt non-cash interest, ARRIS
records non-cash interest expense related to the 2013 convertible
debt as a result of the adoption of FSP ABP 14-1 on January 1,
2009. Disclosing the non-cash piece provides investors with
the information regarding interest that will not be paid out in
cash. In the first and second quarters of 2010 and in the
first and third quarter of 2009, income tax expense
adjustments were recorded for state valuation allowances and
research and development tax credits. During the
first quarter of 2009, and the second, third & fourth quarters
of 2010, ARRIS repurchased a portion of their convertible
debt and recognized a gain of approximately $4.2 million, $0.1
million and $0.3 million and loss of $5 thousand,
respectively.
In assessing operating
performance and preparing budgets and forecasts, ARRIS’ management
considers performance after making these adjustments and believes
that providing investors with the same information provides greater
transparency and insight into management’s analysis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARRIS GROUP,
INC.
|
|
PRELIMINARY
SUPPLEMENTAL OPERATING INCOME RECONCILIATIONS
|
|
(in
thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4
2010
|
|
Q4
2009
|
|
Year
2010
|
|
Year
2009
|
|
|
|
|
|
|
|
|
|
|
|
Operating income as
reported
|
|
$
17,745
|
|
$
49,305
|
|
$
109,905
|
|
$
148,747
|
|
Operating income as a % of
sales
|
|
7%
|
|
16%
|
|
10%
|
|
13%
|
|
Highlighted
Items:
|
|
|
|
|
|
|
|
|
|
Stock compensation
expense
|
|
5,769
|
|
4,207
|
|
21,827
|
|
15,921
|
|
Acquisition costs,
restructuring and other
|
|
(8)
|
|
2,917
|
|
65
|
|
3,977
|
|
Amortization of intangible
assets
|
|
8,944
|
|
9,554
|
|
35,957
|
|
37,361
|
|
Operating income excluding
highlighted items
|
|
32,450
|
|
65,983
|
|
167,754
|
|
206,006
|
|
Operating income excluding
highlighted items as a % of sales
|
|
12%
|
|
22%
|
|
15%
|
|
19%
|
|
|
|
|
|
|
|
|
|
|
|
See the GAAP to Non-GAAP EPS
reconciliation for a discussion regarding these adjustments and
management's reasoning for providing this Non-GAAP financial
measure.
|
|
|
|
|
|
|
|
|
|
|
ARRIS GROUP,
INC.
|
|
Net Income
Reconciliation (unaudited)
|
|
Q1 2011 EPS
Guidance
|
|
|
|
|
|
|
|
Estimated GAAP EPS -
diluted
|
$0.05 - $0.09
|
|
Reconciling Items:
|
|
|
Amortization of
intangibles, after tax
|
0.05
|
|
Stock compensation
expense, after tax
|
0.03
|
|
Non-cash interest expense,
after tax
|
0.01
|
|
Subtotal
|
0.09
|
|
Estimated adjusted (non-GAAP)
EPS - diluted
|
$0.14 - $0.18
|
|
|
|
|
See the Supplemental Net
Income Reconciliation for a discussion regarding these
adjustments and management's
reasoning for providing this adjusted financial
measure
|
|
|
|
SOURCE ARRIS Group, Inc.