SUWANEE, Ga., Feb. 8, 2012 /PRNewswire/ -- ARRIS Group, Inc.
(NASDAQ: ARRS), today announced preliminary and unaudited financial
results for the fourth quarter and full year 2011.
Revenues in the fourth quarter 2011 were $281.1 million, up from both the fourth quarter
2010 revenues of $266.2 million, and
third quarter 2011 revenues of $274.4
million. Full year 2011 and 2010 revenues were
$1,088.7 million and $1,087.5 million, respectively.
Adjusted net income (a non-GAAP measure) in the fourth quarter
2011 was $0.21 per diluted share,
compared to $0.19 per diluted share
for the fourth quarter 2010 and $0.21
per diluted share for the third quarter of 2011. Adjusted net
income in the fourth quarter 2011 includes approximately
$(0.01) net loss per diluted share
related to BigBand's operations (excluding acquisition, severance,
amortization expenses). Adjusted net income was $0.82 per diluted share for the full year 2011
and compares to $0.85 per diluted
share for the full year 2010.
During the fourth quarter the company recorded an estimated
non-cash goodwill and intangible assets impairment associated with
the MCS segment (net of related estimated tax benefits) of
approximately $(59) million, or
$(0.50) per diluted share, resulting
from the Company's lower year over year long-term projections for
this segment. This analysis is not complete and the
impairment related estimates may change when the analysis is
completed. As a result, the GAAP net loss in the fourth
quarter 2011 is estimated to be $(0.47) per diluted share, as compared to fourth
quarter 2010 GAAP net income of $0.09
per diluted share and third quarter 2011 GAAP net income of
$0.11 per diluted share. Full
year 2011 GAAP net loss is estimated to be $(0.11) per diluted share as compared to GAAP net
income of $0.50 per diluted share in
2010. Significant GAAP items that have been adjusted in computing
adjusted net income and adjusted net income per diluted share
include: purchase accounting impacts related to acquired deferred
revenue; amortization of intangible assets; goodwill,
intangible and long term investment impairments; equity
compensation; non-cash interest expense; acquisition
and restructuring charges; and certain discrete tax
items. A reconciliation of adjusted net income to GAAP net income
(loss) 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 2011 was 37.9%, which
compares to the fourth quarter 2010 gross margin of 36.2% and the
third quarter 2011 gross margin of 36.5%.
The Company ended the fourth quarter 2011 with $561.1 million of cash resources, which includes
$518.8 million of cash, cash
equivalents and short-term investments, and $42.3 million of long-term marketable security
investments, as compared to $620.1
million at the end of the fourth quarter 2010 and
$590.6 million at the end of the
third quarter 2011. During the fourth quarter the Company used
$34.4 million to repurchase 3.3
million shares of its common stock. During 2011, the Company used a
total of $109.1 million to repurchase
10.0 million shares of its common stock and $5 million in face value of convertible notes.
Also, in the fourth quarter 2011 the Company used
approximately $53 million of cash
(net of cash and marketable securities acquired) to complete the
acquisition of BigBand Networks. The Company generated
$60.9 million of cash from operating
activities during the fourth quarter 2011 and $113.2 million during the full year 2011, which
compares to $22.6 million and
$118.5 million during the same
periods in 2010, respectively.
Order backlog at the end of the fourth quarter 2011 was
$148.5 million as compared to
$140.4 million and $155.3 million at the end of the fourth quarter
2010 and the third quarter 2011, respectively. The Company's
book-to-bill ratio in the fourth quarter 2011 was 0.98 as compared
to the fourth quarter 2010 of 1.08 and the third quarter 2011 of
1.00.
"Our business continues to be driven by the dramatic rise in the
number and usage of connected devices in the home. This in
turn drove strong demand for our products during the December
quarter. Our customers continue to increase their broadband
market share and expand their networks as they meet subscribers'
demand for more bandwidth," said Bob
Stanzione, ARRIS Chairman & CEO, "Looking forward, I
believe we are well positioned for revenue growth as we continue to
see gathering momentum across our entire product line."
During the fourth quarter, the Company closed its acquisition of
BigBand Networks. This acquisition supports the Company's strategy
of expanding its video product suite and the ongoing investment in
the evolution towards network convergence onto an all IP
platform.
"With respect to the first quarter, we now project that revenues
for the Company will be in the range of $285
to $305 million, with adjusted net income per diluted share
in the range of $0.13 to $0.17 and
GAAP net income per diluted share in the range of $0.01 to $0.05," said David Potts, ARRIS EVP & CFO.
"Included in our first quarter guidance we estimate an
approximate non-GAAP $(0.03) per
diluted share loss related to the full quarter inclusion of BigBand
in our results. Also, Congress has not renewed the R&D tax
credit legislation resulting in an approximate $(0.01) per diluted share impact in the first
quarter."
ARRIS management will conduct a conference call at 5:00 pm EST, today, Wednesday, February 8, 2012, to discuss these
results in detail. You may participate in this conference
call by dialing 888-680-0879 or 617-213-4856 for international
calls prior to the start of the call and providing the ARRIS Group,
Inc. name, conference pass code 14376738 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 13,
2012 by dialing 888-286-8010 or 617-801-6888 for
international calls and using the pass code 16001901. 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 communications and IP
technologies that support broadband services for residential and
business customers around the world. The company supplies broadband
operators with the tools and platforms they need to deliver and
monitor advanced video, data and voice subscriber services,
including whole home video across multiple screens, ultra
high-speed data, personalized advertising and carrier-grade
telephony. Headquartered near Atlanta, in Suwanee,
Georgia, USA, ARRIS has R&D centers in Beaverton, OR; Beijing, China, Chicago, IL; Cork,
Ireland; Kirkland, WA;
Redwood City, CA; Shenzhen, China; State College, PA; Tel Aviv, Israel; Wallingford, CT and Waltham, MA, 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 2012, full year
2012, and beyond;
- expected market and product expansion;
- 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 2012 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, 2011.
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,
|
|
|
2011
|
|
2011
|
|
2011
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
235,875
|
|
$
354,659
|
|
$
360,281
|
|
$
358,747
|
|
$
353,121
|
|
Short-term investments, at
fair value
|
282,904
|
|
220,318
|
|
231,254
|
|
260,862
|
|
266,981
|
|
Total cash, cash equivalents and short term investments
|
518,779
|
|
574,977
|
|
591,535
|
|
619,609
|
|
620,102
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted cash
|
4,101
|
|
3,647
|
|
3,646
|
|
4,176
|
|
4,937
|
|
Accounts receivable,
net
|
152,437
|
|
165,821
|
|
152,436
|
|
149,976
|
|
125,933
|
|
Other
receivables
|
8,789
|
|
5,296
|
|
406
|
|
5,275
|
|
6,528
|
|
Inventories,
net
|
115,912
|
|
116,769
|
|
113,020
|
|
105,787
|
|
101,763
|
|
Prepaids
|
10,408
|
|
10,692
|
|
10,272
|
|
12,115
|
|
9,237
|
|
Current deferred income
tax assets
|
22,048
|
|
24,239
|
|
22,681
|
|
20,450
|
|
19,819
|
|
Other current
assets
|
28,148
|
|
21,695
|
|
25,216
|
|
33,535
|
|
33,054
|
|
Total current
assets
|
860,622
|
|
923,136
|
|
919,212
|
|
950,923
|
|
921,373
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment,
net
|
61,375
|
|
57,619
|
|
57,100
|
|
56,617
|
|
56,306
|
|
Goodwill
|
194,047
|
|
233,430
|
|
233,440
|
|
233,471
|
|
234,964
|
|
Intangible assets,
net
|
131,192
|
|
141,784
|
|
150,728
|
|
159,672
|
|
168,616
|
|
Investments
|
71,095
|
|
47,221
|
|
34,237
|
|
32,787
|
|
31,015
|
|
Noncurrent deferred income tax
assets
|
35,982
|
|
9,637
|
|
9,839
|
|
10,183
|
|
6,293
|
|
Other assets
|
10,997
|
|
5,400
|
|
5,878
|
|
5,798
|
|
5,520
|
|
|
$
1,365,310
|
|
$
1,418,227
|
|
$
1,410,434
|
|
$
1,449,451
|
|
$
1,424,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
$
40,671
|
|
$
38,918
|
|
$
27,825
|
|
$
35,796
|
|
$
50,736
|
|
Accrued compensation,
benefits and related taxes
|
36,764
|
|
25,320
|
|
20,832
|
|
26,278
|
|
28,778
|
|
Accrued
warranty
|
3,350
|
|
2,933
|
|
3,300
|
|
2,931
|
|
2,945
|
|
Deferred
revenue
|
43,746
|
|
39,094
|
|
47,166
|
|
43,019
|
|
31,625
|
|
Other accrued
liabilities
|
32,907
|
|
19,653
|
|
17,805
|
|
17,594
|
|
18,847
|
|
Total current
liabilities
|
157,438
|
|
125,918
|
|
116,928
|
|
125,618
|
|
132,931
|
|
Long-term debt, net of current
portion
|
209,766
|
|
206,825
|
|
208,336
|
|
205,447
|
|
202,615
|
|
Accrued pension
|
25,260
|
|
17,989
|
|
17,730
|
|
17,472
|
|
17,213
|
|
Accrued severance
liability
|
4,191
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Noncurrent income taxes
payable
|
24,450
|
|
22,471
|
|
21,844
|
|
21,844
|
|
17,702
|
|
Noncurrent deferred income tax
liabilities
|
-
|
|
21,117
|
|
24,808
|
|
25,827
|
|
29,151
|
|
Other noncurrent
liabilities
|
23,088
|
|
16,253
|
|
17,367
|
|
18,271
|
|
15,406
|
|
Total
liabilities
|
444,193
|
|
410,573
|
|
407,013
|
|
414,479
|
|
415,018
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
|
|
|
Preferred stock
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Common stock
|
1,449
|
|
1,446
|
|
1,443
|
|
1,438
|
|
1,409
|
|
Capital in excess of par
value
|
1,245,115
|
|
1,237,852
|
|
1,228,729
|
|
1,219,615
|
|
1,206,157
|
|
Treasury stock at
cost
|
(254,409)
|
|
(220,034)
|
|
(202,933)
|
|
(145,286)
|
|
(145,286)
|
|
Unrealized gain (loss) on
marketable securities
|
(648)
|
|
26
|
|
1,530
|
|
1,244
|
|
392
|
|
Unfunded pension
liability
|
(9,850)
|
|
(5,813)
|
|
(5,813)
|
|
(5,813)
|
|
(5,813)
|
|
Accumulated
deficit
|
(60,356)
|
|
(5,639)
|
|
(19,351)
|
|
(36,042)
|
|
(47,606)
|
|
Cumulative translation
adjustments
|
(184)
|
|
(184)
|
|
(184)
|
|
(184)
|
|
(184)
|
|
Total stockholders'
equity
|
921,117
|
|
1,007,654
|
|
1,003,421
|
|
1,034,972
|
|
1,009,069
|
|
|
$
1,365,310
|
|
$
1,418,227
|
|
$
1,410,434
|
|
$
1,449,451
|
|
$
1,424,087
|
|
|
|
|
|
|
|
|
|
|
|
ARRIS GROUP,
INC.
|
|
PRELIMINARY
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(in
thousands, except per share data)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
For the
Three Months
|
|
For the
Twelve Months
|
|
|
Ended
December 31,
|
|
Ended
December 31,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
281,076
|
|
$
266,168
|
|
$
1,088,685
|
|
$
1,087,506
|
|
Cost of sales
|
174,531
|
|
169,855
|
|
678,172
|
|
663,417
|
|
Gross margin
|
106,545
|
|
96,313
|
|
410,513
|
|
424,089
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative expenses
|
40,829
|
|
34,205
|
|
148,755
|
|
137,694
|
|
Research and development
expenses
|
37,785
|
|
35,427
|
|
146,519
|
|
140,468
|
|
Acquisition
costs
|
2,730
|
|
-
|
|
3,205
|
|
-
|
|
Restructuring
charges
|
3,391
|
|
(8)
|
|
4,360
|
|
65
|
|
Goodwill and intangibles
impairment
|
82,561
|
|
-
|
|
82,561
|
|
-
|
|
Amortization of intangible
assets
|
6,520
|
|
8,944
|
|
33,352
|
|
35,957
|
|
|
173,816
|
|
78,568
|
|
418,752
|
|
314,184
|
|
Operating income
(loss)
|
(67,271)
|
|
17,745
|
|
(8,239)
|
|
109,905
|
|
Other expense
(income):
|
|
|
|
|
|
|
|
|
Interest
expense
|
4,258
|
|
4,237
|
|
16,940
|
|
17,965
|
|
Impairment of
investment
|
3,000
|
|
-
|
|
3,000
|
|
-
|
|
Gain on
investments
|
(926)
|
|
(13)
|
|
(1,430)
|
|
(414)
|
|
Gain on foreign
currency
|
(705)
|
|
(327)
|
|
(579)
|
|
(44)
|
|
Interest income
|
(715)
|
|
(528)
|
|
(3,154)
|
|
(1,997)
|
|
Loss (gain) on debt
redemption
|
-
|
|
5
|
|
19
|
|
(373)
|
|
Other (income) expense,
net
|
(211)
|
|
31
|
|
(893)
|
|
138
|
|
Income (loss) from continuing operations before income taxes
|
(71,972)
|
|
14,340
|
|
(22,142)
|
|
94,630
|
|
Income tax expense
(benefit)
|
(17,255)
|
|
3,019
|
|
(9,392)
|
|
30,502
|
|
Net income
(loss)
|
$
(54,717)
|
|
$
11,321
|
|
$
(12,750)
|
|
$
64,128
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common
share:
|
|
|
|
|
|
|
|
|
Basic
|
$
(0.47)
|
|
$
0.09
|
|
$
(0.11)
|
|
$
0.51
|
|
Diluted
|
$
(0.47)
|
|
$
0.09
|
|
$
(0.11)
|
|
$
0.50
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares:
|
|
|
|
|
|
|
|
|
Basic
|
117,316
|
|
122,866
|
|
120,157
|
|
125,157
|
|
Diluted
|
117,316
|
|
125,758
|
|
120,157
|
|
128,271
|
|
|
|
|
|
|
|
|
|
ARRIS GROUP,
INC.
|
|
PRELIMINARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(in
thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
For the
Three Months
|
|
For the
Twelve Months
|
|
|
|
|
|
Ended
December 31,
|
|
Ended
December 31,
|
|
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Activities:
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
$
(54,717)
|
|
$
11,321
|
|
$
(12,750)
|
|
$
64,128
|
|
|
|
Depreciation
|
6,589
|
|
5,972
|
|
24,139
|
|
22,865
|
|
|
|
Amortization of intangible
assets
|
6,520
|
|
8,944
|
|
33,352
|
|
35,956
|
|
|
|
Amortization of deferred finance
fees
|
160
|
|
164
|
|
647
|
|
691
|
|
|
|
Impairment of goodwill &
intangibles
|
82,561
|
|
-
|
|
82,561
|
|
-
|
|
|
|
Non-cash interest
expense
|
2,941
|
|
2,777
|
|
11,545
|
|
11,325
|
|
|
|
Deferred income tax provision
(benefit)
|
2,997
|
|
5,990
|
|
(12,490)
|
|
8,588
|
|
|
|
Deferred income tax related to goodwill & intangible impairment
|
(23,242)
|
|
-
|
|
(23,242)
|
|
-
|
|
|
|
Stock compensation
expense
|
5,108
|
|
5,769
|
|
22,055
|
|
21,827
|
|
|
|
Provision for doubtful
accounts
|
201
|
|
(366)
|
|
200
|
|
(283)
|
|
|
|
Loss (gain) on debt
retirement
|
-
|
|
5
|
|
19
|
|
(373)
|
|
|
|
Loss on disposal of fixed
assets
|
10
|
|
37
|
|
16
|
|
406
|
|
|
|
Gain on investments
|
(926)
|
|
(13)
|
|
(1,430)
|
|
(414)
|
|
|
|
Impairment of
investment
|
3,000
|
|
-
|
|
3,000
|
|
-
|
|
|
|
Excess tax benefits from
stock-based compensation plans
|
(679)
|
|
(69)
|
|
(3,668)
|
|
(2,752)
|
|
|
Changes in operating assets & liabilities, net of effects of acquisitions and disposals:
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
17,794
|
|
8,348
|
|
(22,093)
|
|
18,058
|
|
|
|
Other receivables
|
(1,618)
|
|
(2,819)
|
|
(1,635)
|
|
(59)
|
|
|
|
Inventory
|
7,862
|
|
(12,560)
|
|
(7,144)
|
|
(5,912)
|
|
|
|
Income taxes
payable/recoverable
|
(2,158)
|
|
(3,614)
|
|
15,795
|
|
(17,787)
|
|
|
|
Accounts payable and accrued
liabilities
|
7,003
|
|
(6,082)
|
|
671
|
|
(48,308)
|
|
|
|
Other, net
|
1,476
|
|
(1,236)
|
|
3,605
|
|
10,553
|
|
|
|
|
Net cash provided by operating
activities
|
60,882
|
|
22,568
|
|
113,153
|
|
118,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities:
|
|
|
|
|
|
|
|
|
|
Purchases of
investments
|
(49,833)
|
|
(182,829)
|
|
(277,937)
|
|
(514,376)
|
|
|
Disposals of
investments
|
36,547
|
|
204,163
|
|
296,774
|
|
364,077
|
|
|
Purchases of property &
equipment, net
|
(4,359)
|
|
(5,518)
|
|
(23,307)
|
|
(22,645)
|
|
|
Cash proceeds from sale of
property & equipment
|
14
|
|
2
|
|
84
|
|
245
|
|
|
Cash paid for acquisition, net
of cash acquired (1)
|
(130,227)
|
|
(4,000)
|
|
(130,227)
|
|
(4,000)
|
|
|
|
|
Net cash provided by (used in)
investing activities
|
(147,858)
|
|
11,818
|
|
(134,613)
|
|
(176,699)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities:
|
|
|
|
|
|
|
|
|
|
Payment of debt
obligations
|
-
|
|
(12)
|
|
-
|
|
(124)
|
|
|
Early redemption of long-term
debt
|
-
|
|
(4,956)
|
|
(4,984)
|
|
(23,287)
|
|
|
Repurchase of common
stock
|
(34,375)
|
|
(30,038)
|
|
(109,123)
|
|
(69,326)
|
|
|
Excess income tax benefits from
stock-based compensation plans
|
679
|
|
69
|
|
3,668
|
|
2,752
|
|
|
Repurchase of shares to satisfy
employee tax withholdings
|
(72)
|
|
(25)
|
|
(8,332)
|
|
(6,447)
|
|
|
Fees and proceeds from issuance
of common stock, net
|
1,960
|
|
1,803
|
|
22,985
|
|
7,178
|
|
|
|
|
Net cash used in financing
activities
|
(31,808)
|
|
(33,159)
|
|
(95,786)
|
|
(89,254)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
and cash equivalents
|
(118,784)
|
|
1,227
|
-
|
(117,246)
|
|
(147,444)
|
|
Cash and cash equivalents at
beginning of period
|
354,659
|
|
351,894
|
|
353,121
|
|
500,565
|
|
Cash and cash equivalents at end
of period
|
$
235,875
|
|
$
353,121
|
|
$
235,875
|
|
$
353,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes $77,074 thousand of
short and long-term investments acquired from BigBand in
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
ARRIS GROUP,
INC.
|
|
PRELIMINARY
SUPPLEMENTAL SALES & NET INCOME RECONCILIATION
|
|
(in
thousands, except per share data) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4
2011
|
|
YTD
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
$
281,076
|
|
|
|
$
1,088,685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Highlighted items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase accounting
impacts of deferred revenue
|
4,332
|
|
|
|
4,332
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales excluding highlighted
items
|
$
285,408
|
|
|
|
$
1,093,017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4
2011
|
|
YTD
2011
|
|
Q4
2010
|
|
YTD
2010
|
|
|
|
|
|
Per
Diluted
|
|
|
|
Per
Diluted
|
|
|
|
Per
Diluted
|
|
|
|
Per
Diluted
|
|
|
|
Amount
|
|
Share
|
|
Amount
|
|
Share
|
|
Amount
|
|
Share
|
|
Amount
|
|
Share
|
|
|
Net income (loss)
|
$
(54,717)
|
|
$
(0.47)
|
|
$
(12,750)
|
|
$
(0.11)
|
|
$
11,321
|
|
$
0.09
|
|
$
64,128
|
|
$
0.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Highlighted items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impacting
gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase accounting
impacts of deferred revenue
|
3,126
|
|
0.03
|
|
3,126
|
|
0.03
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
Stock compensation
expense
|
521
|
|
-
|
|
2,040
|
|
0.02
|
|
492
|
|
-
|
|
1,897
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impacting
operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition
costs
|
2,730
|
|
0.02
|
|
3,205
|
|
0.03
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
Restructuring
|
3,391
|
|
0.03
|
|
4,360
|
|
0.04
|
|
(8)
|
|
-
|
|
65
|
|
-
|
|
|
Amortization of intangible
assets
|
6,520
|
|
0.05
|
|
33,352
|
|
0.27
|
|
8,944
|
|
0.07
|
|
35,957
|
|
0.28
|
|
|
Goodwill and intangibles
impairment
|
82,561
|
|
0.69
|
|
82,561
|
|
0.67
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
Stock compensation
expense
|
4,587
|
|
0.04
|
|
20,015
|
|
0.16
|
|
5,277
|
|
0.04
|
|
19,930
|
|
0.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impacting
other (income) / expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash interest
expense
|
2,941
|
|
0.02
|
|
11,545
|
|
0.09
|
|
2,777
|
|
0.02
|
|
11,325
|
|
0.09
|
|
|
Impairment of
investment
|
3,000
|
|
0.03
|
|
3,000
|
|
0.02
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
Loss on retirement of
debt
|
-
|
|
-
|
|
19
|
|
-
|
|
5
|
|
-
|
|
(373)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impacting
income tax expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments of income tax valuation allowances and other
|
2,344
|
|
0.02
|
|
(3,573)
|
|
(0.03)
|
|
1,058
|
|
0.01
|
|
889
|
|
0.01
|
|
|
Tax impact related to
goodwill and intangibles impairment
|
(23,242)
|
|
(0.19)
|
|
(23,242)
|
|
(0.19)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax related
to highlighted items above, except goodwill and
intangibles
impairment
|
(8,448)
|
|
(0.07)
|
|
(23,652)
|
|
(0.19)
|
|
(6,503)
|
|
(0.05)
|
|
(24,311)
|
|
(0.19)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total highlighted
items
|
80,031
|
|
0.67
|
|
112,756
|
|
0.92
|
|
12,042
|
|
0.10
|
|
45,379
|
|
0.35
|
|
|
Net income excluding highlighted
items
|
$
25,314
|
|
$
0.21
|
|
$
100,006
|
|
$
0.82
|
|
$
23,363
|
|
$
0.19
|
|
$
109,507
|
|
$
0.85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares -
basic
|
|
|
117,316
|
|
|
|
120,157
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares -
diluted (1)
|
|
|
119,609
|
|
|
|
122,555
|
|
|
|
125,758
|
|
|
|
128,271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Basic shares used for 2001 as
losses were reported for those periods and the inclusion of
dilutive shares would be antidilutive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to GAAP to Adjusted
Non-GAAP Financial Measures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to
GAAP to Adjusted Non-GAAP Financial Measures
|
|
|
The Company reports its financial results in accordance with
accounting principles generally accepted in the United States (“GAAP” or referred to
herein as “reported”). However, management believes that certain
non-GAAP financial measures provide management and other users with
additional meaningful financial information that should be
considered when assessing our ongoing performance. Our management
regularly uses our supplemental non-GAAP financial measures
internally to understand, manage and evaluate our business and make
operating decisions. These non-GAAP measures are among the factors
management uses in planning for and forecasting future periods.
Non-GAAP financial measures should be viewed in addition to,
and not as an alternative to, the Company’s reported results
prepared in accordance with GAAP. Our non-GAAP financial
measures reflect adjustments based on the following items, as well
as the related income tax effects:
Purchase Accounting Impacts Related to Deferred Revenue:
In connection with our acquisition of BigBand, business
combination rules require us to account for the fair values of
arrangements for which acceptance has not been obtained, and post
contract support in our purchase accounting. The non-GAAP
adjustment to our sales and cost of sales is intended to include
the full amounts of such revenues. We believe the adjustment
to these revenues is useful as a measure of the ongoing performance
of our business. We have historically experienced high
renewal rates related to our support agreements and our objective
is to increase the renewal rates on acquired post contract support
agreements; however, we cannot be certain that our customers will
renew our contracts.
Stock-Based Compensation Expense: We have excluded the effect of
stock-based compensation expenses in calculating our non-GAAP
operating expenses and net income (loss) measures. Although
stock-based compensation is a key incentive offered to our
employees, we continue to evaluate our business performance
excluding stock-based compensation expenses. We record non-cash
compensation expense related to grants of options and restricted
stock. Depending upon the size, timing and the terms of the grants,
the non-cash compensation expense may vary significantly but will
recur in future periods.
Acquisition Costs: We have excluded the effect of
acquisition related and other expenses and the effect of
restructuring expenses in calculating our non-GAAP operating
expenses and net income (loss) measures. We incurred significant
expenses in connection with our recent acquisition of BigBand,
which we generally would not have otherwise incurred in the periods
presented as part of our continuing operations. Acquisition related
expenses consist of transaction costs, costs for transitional
employees, other acquired employee related costs, and integration
related outside services. We believe it is useful to understand the
effects of these items on our total operating expenses.
Restructuring Costs: We have excluded the effect of
restructuring charges in calculating our non-GAAP operating
expenses and net income (loss) measures. Restructuring expenses
consist of employee severance, abandoned facilities, and other exit
costs. We believe it is useful to understand the effects of these
items on our total operating expenses.
Amortization of Intangible Assets: We have excluded the effect
of amortization of intangible assets in calculating our non-GAAP
operating expenses and net income (loss) measures. Amortization of
intangible assets is non-cash, and is inconsistent in amount and
frequency and is significantly affected by the timing and size of
our acquisitions. Investors should note that the use of intangible
assets contributed to our revenues earned during the periods
presented and will contribute to our future period revenues as
well. Amortization of intangible assets will recur in future
periods.
Impairment of Goodwill and Intangibles: We have excluded the
effect of the estimated impairment of goodwill and intangible
assets in calculating our non-GAAP operating expenses and net
income (loss) measures. Although an impairment does not directly
impact the Company’s current cash position, such expense represents
the declining value of the technology and other intangibles assets
that were acquired. We exclude these impairments when significant
and they are not reflective of ongoing business and operating
results.
Non-Cash Interest on Convertible Debt: We have excluded the
effect of non-cash interest in calculating our non-GAAP operating
expenses and net income (loss) measures. We record the accretion of
the debt discount related to the equity component non-cash interest
expense. We believe it is useful to understand the component of
interest expense that will not be paid out in cash.
Impairment of Investment: We have excluded the effect of an
other-than-temporary impairment of a cost method investment in
calculating our non-GAAP financial measures. We believe it is
useful to understand the effect of this non-cash item in our other
expense (income).
Loss (Gain) on Retirement of Debt: We have excluded the
effect of the loss (gain) on retirement of debt in calculating our
non-GAAP financial measures. We believe it is useful for
investors to understand the effect of this non-cash item in our
other expense (income).
Income Tax Expense (Benefit): We have excluded the tax effect of
the non-GAAP items mentioned above. Additionally, we have
excluded the effects of certain tax adjustments related to state
valuation allowances, research and development tax credits and
provision to return differences.
SOURCE ARRIS Group, Inc.