SUWANEE, Ga., April 29, 2015 /PRNewswire/ -- ARRIS Group,
Inc. (NASDAQ: ARRS) today announced preliminary and unaudited
financial results for the first quarter 2015.
First Quarter 2015 Financial Highlights
- Revenues were $1,215.2
million
- Adjusted net income (a non-GAAP measure) was $0.44 per diluted share
- GAAP net income was $0.13 per
diluted share
- End-of-quarter cash resources were $631.6 million
- Order backlog was $725.7
million
- Book-to-bill ratio was 1.08
- Repurchased approximately 871 thousand shares for $25 million
"We are off to a good start in 2015. Our first quarter
came in line with our expectations, and we are executing on key
elements of our strategy. Notably, we are expanding our product
offerings, scale and international reach with the pending
acquisitions of both Pace and Active Video Networks. With
respect to the second quarter 2015, we expect revenues will grow
and will be in the range of $1,270 million
to $1,310 million, with adjusted net income per diluted
share in the range of $0.53 to $0.58
and GAAP net income per diluted share in the range of $0.17 to $0.22," said Bob
Stanzione, ARRIS Chairman and CEO.
Revenues in the first quarter 2015 of $1,215.2 million were down $9.8 million, or 1%, as compared to first quarter
2014 revenues of $1,225.0
million. First quarter revenues were also down
$48.2 million, or 4%, as compared to
fourth quarter 2014 revenues of $1,263.4
million.
Adjusted net income (a non-GAAP measure) in the first
quarter 2015 was $0.44 per diluted
share, as compared to $0.47 per
diluted share for the first quarter 2014, a decrease of
$0.03 per diluted share or 6%.
Adjusted net income decreased $0.34 per diluted share, or 44% percent, as
compared to the fourth quarter 2014 adjusted net income of
$0.78 per diluted share.
A reconciliation of adjusted net income per diluted share to
GAAP net income per diluted share is attached to this release and
also can be found on the Company's website (www.arris.com).
GAAP net income in the first quarter 2015 was
$0.13 per diluted share, as compared
to first quarter 2014 GAAP net income of $0.28 per diluted share and fourth quarter 2014
GAAP net income of $1.29 per diluted
share. The first quarter GAAP net income decreased
$0.15 per diluted share, or 54%,
compared to the first quarter of last year. It also decreased
$1.16 per diluted share, or 90%,
compared to the fourth quarter of 2014.
Cash & Cash Equivalents - The Company ended the first
quarter 2015 with $631.6 million of
cash resources, which includes $628.6
million of cash, cash equivalents and short-term
investments, and $3.0 million of
long-term marketable securities, as compared to $697.4 million, in the aggregate, at the end of
the fourth quarter 2014. The Company used $63.3 million of cash for operating activities
during the first quarter 2015, as compared to $27.0 million generated during the first quarter
2014.
Order backlog at the end of the first quarter 2015 was
$725.7 million as compared to
$996.1 million and $631.0 million at the end of the first quarter
2014 and the fourth quarter 2014, respectively. The Company's
book-to-bill ratio in the first quarter 2015 was 1.08 as compared
to the first quarter 2014 of 1.37 and the fourth quarter 2014 of
1.03.
ARRIS management will conduct a conference call at 5:00 pm EDT, today, Wednesday, April 29, 2015, to discuss these
results in detail. You may participate in this conference call by
dialing 888-680-0869 or 617-213-4854 for international calls prior
to the start of the call and providing the ARRIS Group, Inc. name,
conference pass code 78388669 and Bob
Puccini as the moderator. Please note that ARRIS will not
accept any calls related to this earnings release until after the
conclusion of the conference call. A replay of the conference call
can be accessed approximately two hours after the call through
May 6, 2015, by dialing 888-286-8010
or 617-801-6888 for international calls and using the pass code
61686806. A replay also will be made available for a period of 12
months following the conference call on ARRIS' website at
www.arris.com.
About ARRIS
ARRIS is a global innovator in IP, video and broadband
technology. We have continually worked with our customers to
transform the experience of entertainment and communications for
millions of people around the world. The people of ARRIS are
dedicated to the success of our customers, bringing a passion for
invention that has fueled our history: We created digital
TV, delivered the first wireless broadband gateway and
are pioneering the standards and pathways for tomorrow's
personalized, Ultra HD, multiscreen, and cloud services. We are
dedicated to meeting today's challenges and preparing for the tasks
the future holds. Collaborating with our customers, ARRIS will
continue to solve the most pressing challenges of 21st century
communications. Together, we are inventing the future. For
more information: www.arris.com
No Offer or Solicitation
This release is provided for informational purposes only and
does not constitute an offer to sell, or an invitation to subscribe
for, purchase or exchange, any securities or the solicitation of
any vote or approval in any jurisdiction, nor shall there be any
sale, issuance, exchange or transfer of the securities referred to
in this document in any jurisdiction in contravention of applicable
law.
Forward-Looking Statements
Statements made in this press release, including those related
to:
- the proposed acquisitions of AVN and Pace;
- growth expectations and business prospects;
- revenues and net income for the second quarter 2015, 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,
- ARRIS' completion of the Pace acquisition is subject to
satisfaction of a number of conditions outside of ARRIS' control,
including receipt of necessary regulatory approvals, and the
approval of the shareholders of ARRIS and Pace;
- ARRIS may fail to realize the expected benefits of the
announced transactions; there may be negative effects relating to
the announcement of the transactions or any further announcements
relating to the transactions; and ARRIS may incur significant
transaction costs and/or unknown liabilities;
- projected results for the second quarter 2015 as well as the
general outlook for 2015 and beyond are based on preliminary
estimates, assumptions and projections that management believes to
be reasonable at this time, but are largely beyond management's
control;
- ARRIS' customers operate in a capital intensive consumer based
industry, and 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;
- the strengthening U.S. Dollar may adversely impact ARRIS'
international customer's ability or willingness to purchase
products and the pricing of ARRIS products;
- 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; and
- termination of the previously proposed acquisition of Time
Warner by Comcast and the announced transactions within our
customer base, including the proposed acquisition of DIRECTV by
AT&T, and the proposed acquisition by Frontier Communications
of several properties owned by Verizon may have an impact on
customer's spending.
In addition to the factors set forth elsewhere in this release,
other factors that could cause results to differ from current
expectations include: 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. 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-K for the
year ended December 31, 2014.
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, except as required by law.
Important Additional Information Regarding the Transaction
Will Be Filed With the SEC
In connection with the proposed acquisition of Pace, it is
expected that the shares of New ARRIS to be issued by New ARRIS to
Pace shareholders under the scheme will be issued in reliance upon
the exemption from the registration requirements of the Securities
Act of 1933, as amended, provided by Section 3(a)(10) thereof. In
connection with the issuance of New ARRIS shares to ARRIS
stockholders pursuant to the merger that forms a part of the
transaction, New ARRIS will file with the SEC a registration
statement on Form S-4 that will contain a prospectus of New ARRIS
as well as a proxy statement of ARRIS relating to the merger that
forms a part of the combination, which we refer to together as the
Form S-4/Proxy Statement.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE FORM
S-4/PROXY STATEMENT, AND OTHER DOCUMENTS FILED WITH THE SEC IN
CONNECTION WITH THE TRANSACTION CAREFULLY AND IN THEIR ENTIRETY,
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
TRANSACTION, THE PARTIES TO THE TRANSACTION AND THE RISKS
ASSOCIATED WITH THE TRANSACTION. Those documents, if and when
filed, as well as ARRIS's and New ARRIS's other public filings with
the SEC may be obtained without charge at the SEC's website at
www.sec.gov and at ARRIS's website at http://ir.arris.com. Security
holders and other interested parties will also be able to obtain,
without charge, a copy of the Form S-4/Proxy Statement and other
relevant documents (when available) by directing a request by mail
to ARRIS Investor Relations, 3871 Lakefield Drive, Suwanee, GA 30024 or at http://ir.arris.com.
Security holders may also read and copy any reports, statements and
other information filed with the SEC at the SEC public reference
room at 100 F Street N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at
(800) 732-0330 or visit the SEC's website for further information
on its public reference room.
Participants in the Solicitation
ARRIS, its directors and certain of its executive officers may
be considered participants in the solicitation of proxies in
connection with the transactions contemplated by the Proxy
Statement. Information about the directors and executive officers
of ARRIS is set forth in its Annual Report on Form 10-K for the
year ended December 31, 2014, which
was filed with the SEC on February 27,
2015, and its proxy statement for its 2015 annual meeting of
shareholders, which was filed with the SEC on April 9, 2015. Other information regarding
potential participants in the proxy solicitations and a description
of their direct and indirect interests, by security holdings or
otherwise, will be contained in the Proxy Statement/Prospectus when
it is filed.
Pace and New ARRIS are each organized under the laws of
England and Wales. Some of the officers and directors of
Pace and New ARRIS are residents of countries other than
the United States. As a result, it
may not be possible to sue Pace, New ARRIS or such persons in a
non-US court for violations of US securities laws. It may be
difficult to compel Pace, New ARRIS and their respective affiliates
to subject themselves to the jurisdiction and judgment of a US
court or for investors to enforce against them the judgments of US
courts.
UK Takeover Code Directors' Confirmation
The statements above with respect to projected ranges of
revenues, adjusted net income per diluted share and GAAP net income
per diluted share for the second quarter 2015 constitute a profit
forecast for the purposes of the UK City Code on Takeovers and
Mergers (the "Profit Forecast"). The Profit Forecast has been
prepared on a basis consistent with ARRIS' accounting policies,
which are in accordance with U.S. GAAP.
The Profit Forecast is based on the following assumptions:
Factors outside the control of ARRIS:
- there will be no material changes to the conditions of the
markets in which ARRIS operates, including material changes in the
capital spending of ARRIS' customers;
- foreign currency exchange rates, interests rates and tax rates
in the geographic markets in which ARRIS operates remain materially
unchanged from the currently prevailing rates;
- there will be no material interruptions in the delivery of
components for the manufacture of ARRIS' products or the delivery
of finished products to customers;
- the announcement of the proposed AVN transaction and the
proposed acquisition of Pace will not have any impact on the timing
or receipt of customer orders;
- there will be no material adverse changes to existing global
macroeconomic or political conditions;
- there will be no material regulatory developments that affect
ARRIS' operations or the operations of its customers; and
- there will be no material adverse events that have a
significant impact on ARRIS' financial condition.
Factors within the control of ARRIS:
- except as previously announced with respect to AVN, there will
be no material acquisitions or dispositions by ARRIS prior to
June 30, 2015;
- there will be no material change in the supplier base of
ARRIS;
- ARRIS's operational costs will not change materially prior to
June 30, 2015
- there will no material change in the business or operational
strategy of ARRIS; and
- there will be no material changes to the management of
ARRIS.
The Directors of ARRIS Group, Inc. confirm that the Profit
Forecast has been properly compiled on the basis of the assumptions
stated above and the basis of accounting used in preparing the
Profit Forecast is consistent with the accounting policies of ARRIS
Group, Inc.
ARRIS GROUP,
INC.
|
PRELIMINARY
CONSOLIDATED BALANCE SHEETS
|
(in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
September
30,
|
|
June
30,
|
|
March
31,
|
|
|
|
2015
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$ 499,482
|
|
$ 565,790
|
|
$ 526,999
|
|
$ 483,277
|
|
$ 440,707
|
|
Short-term
investments, at fair value
|
|
129,073
|
|
126,748
|
|
66,817
|
|
68,586
|
|
80,818
|
|
Total cash, cash
equivalents and short term investments
|
|
628,555
|
|
692,538
|
|
593,816
|
|
551,863
|
|
521,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
cash
|
|
-
|
|
966
|
|
1,022
|
|
1,096
|
|
1,076
|
|
Accounts receivable,
net
|
|
819,918
|
|
598,603
|
|
684,722
|
|
723,527
|
|
714,072
|
|
Other
receivables
|
|
15,054
|
|
10,640
|
|
18,227
|
|
14,610
|
|
11,694
|
|
Inventories,
net
|
|
372,379
|
|
401,165
|
|
368,628
|
|
297,848
|
|
286,058
|
|
Prepaid income
taxes
|
|
13,380
|
|
11,023
|
|
4,431
|
|
32,802
|
|
51,758
|
|
Prepaids
|
|
31,814
|
|
27,497
|
|
34,311
|
|
33,715
|
|
15,986
|
|
Current deferred
income tax assets
|
|
115,926
|
|
113,390
|
|
64,948
|
|
79,070
|
|
80,427
|
|
Other current
assets
|
|
80,943
|
|
61,450
|
|
80,426
|
|
73,695
|
|
70,159
|
|
Total current
assets
|
|
2,077,969
|
|
1,917,272
|
|
1,850,531
|
|
1,808,226
|
|
1,752,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
325,727
|
|
366,431
|
|
371,496
|
|
376,509
|
|
388,653
|
|
Goodwill
|
|
938,645
|
|
936,067
|
|
938,265
|
|
944,115
|
|
940,149
|
|
Intangible assets,
net
|
|
919,876
|
|
943,388
|
|
1,000,441
|
|
1,057,557
|
|
1,114,231
|
|
Investments
|
|
76,492
|
|
77,640
|
|
74,985
|
|
68,852
|
|
72,372
|
|
Noncurrent deferred
income tax assets
|
|
88,366
|
|
71,686
|
|
12,567
|
|
20,468
|
|
21,862
|
|
Other
assets
|
|
45,711
|
|
53,161
|
|
59,102
|
|
56,719
|
|
56,180
|
|
|
|
$ 4,472,786
|
|
$ 4,365,645
|
|
$ 4,307,387
|
|
$ 4,332,446
|
|
$ 4,346,202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$ 594,690
|
|
$ 480,150
|
|
$ 577,319
|
|
$ 636,283
|
|
$ 545,702
|
|
Accrued compensation,
benefits and related taxes
|
|
75,849
|
|
145,278
|
|
130,116
|
|
101,644
|
|
93,251
|
|
Accrued
warranty
|
|
36,824
|
|
42,763
|
|
51,277
|
|
54,546
|
|
53,940
|
|
Deferred
revenue
|
|
107,230
|
|
92,772
|
|
102,717
|
|
114,489
|
|
126,451
|
|
Current portion of
long-term debt & financing lease obligations
|
|
82,787
|
|
73,956
|
|
67,062
|
|
60,171
|
|
53,268
|
|
Income taxes
payable
|
|
13,092
|
|
10,610
|
|
15,344
|
|
19,672
|
|
13,508
|
|
Other accrued
liabilities
|
|
167,430
|
|
164,341
|
|
180,242
|
|
193,971
|
|
194,680
|
|
Total current
liabilities
|
|
1,077,902
|
|
1,009,870
|
|
1,124,077
|
|
1,180,776
|
|
1,080,800
|
|
Long-term debt &
financing lease obligations, net of current portion
|
1,505,073
|
|
1,467,370
|
|
1,487,585
|
|
1,507,796
|
|
1,677,712
|
|
Accrued
pension
|
|
68,060
|
|
64,917
|
|
59,667
|
|
59,552
|
|
58,733
|
|
Noncurrent income
taxes liability
|
|
42,282
|
|
41,082
|
|
31,141
|
|
22,597
|
|
21,913
|
|
Noncurrent deferred
income tax liabilities
|
|
412
|
|
274
|
|
42,926
|
|
74,297
|
|
83,903
|
|
Other noncurrent
liabilities
|
|
90,428
|
|
91,371
|
|
71,882
|
|
68,512
|
|
62,675
|
|
Total
liabilities
|
|
2,784,157
|
|
2,674,884
|
|
2,817,278
|
|
2,913,530
|
|
2,985,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Common
stock
|
|
1,811
|
|
1,796
|
|
1,792
|
|
1,795
|
|
1,794
|
|
Capital in excess of
par value
|
|
1,745,345
|
|
1,739,700
|
|
1,725,383
|
|
1,710,845
|
|
1,689,907
|
|
Treasury stock at
cost
|
|
(331,329)
|
|
(306,330)
|
|
(306,330)
|
|
(306,330)
|
|
(306,330)
|
|
Unrealized gain
(loss) on marketable securities
|
|
34
|
|
25
|
|
(77)
|
|
150
|
|
27
|
|
Unfunded pension
liability
|
|
(7,076)
|
|
(7,181)
|
|
(2,416)
|
|
(2,416)
|
|
(2,416)
|
|
Unrealized loss on
derivative Instruments
|
|
(5,140)
|
|
(3,166)
|
|
(1,959)
|
|
(4,503)
|
|
(2,660)
|
|
Retained earnings
(deficit)
|
|
285,768
|
|
266,642
|
|
73,881
|
|
19,255
|
|
(19,769)
|
|
Cumulative
translation adjustments
|
|
(784)
|
|
(725)
|
|
(165)
|
|
120
|
|
(87)
|
|
Total stockholders'
equity
|
|
1,688,629
|
|
1,690,761
|
|
1,490,109
|
|
1,418,916
|
|
1,360,466
|
|
|
|
$ 4,472,786
|
|
$ 4,365,645
|
|
$ 4,307,387
|
|
$ 4,332,446
|
|
$ 4,346,202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARRIS GROUP,
INC.
|
PRELIMINARY
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(in thousands,
except per share data)
|
(unaudited)
|
|
|
|
|
|
For the Three
Months
|
|
Ended March
31,
|
|
2015
|
|
2014
|
|
|
|
|
Net sales
|
$ 1,215,158
|
|
$ 1,225,017
|
Cost of
sales
|
878,602
|
|
878,243
|
Gross
margin
|
336,556
|
|
346,774
|
Operating
expenses:
|
|
|
|
Selling, general, and
administrative expenses
|
100,324
|
|
99,132
|
Research and
development expenses
|
132,469
|
|
134,153
|
Amortization of
intangible assets
|
57,147
|
|
64,001
|
Integration,
acquisition, restructuring and other costs
|
898
|
|
11,502
|
|
290,838
|
|
308,788
|
Operating
income
|
45,718
|
|
37,986
|
Other expense
(income):
|
|
|
|
Interest
expense
|
13,367
|
|
16,598
|
Loss on
investments
|
1,709
|
|
1,674
|
Loss (gain) on
foreign currency
|
20
|
|
(679)
|
Interest
income
|
(721)
|
|
(583)
|
Other (income)
expense, net
|
7,063
|
|
2,172
|
Income before income
taxes
|
24,280
|
|
18,804
|
Income tax expense
(benefit)
|
5,154
|
|
(21,996)
|
Net
income
|
$ 19,126
|
|
$ 40,800
|
|
|
|
|
Net income per common
share:
|
|
|
|
Basic
|
$
0.13
|
|
$
0.29
|
Diluted
|
$
0.13
|
|
$
0.28
|
|
|
|
|
Weighted average
common shares:
|
|
|
|
Basic
|
145,350
|
|
142,854
|
Diluted
|
148,986
|
|
147,152
|
ARRIS GROUP,
INC.
|
PRELIMINARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
For the Three
Months
|
|
|
|
|
|
|
|
|
|
Ended March
31,
|
|
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Activities:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
$
19,126
|
|
$
40,800
|
|
|
Depreciation
|
|
|
|
|
|
19,884
|
|
19,994
|
|
|
Amortization of
intangible assets
|
|
|
|
|
|
57,852
|
|
64,001
|
|
|
Amortization of
deferred finance fees and debt discount
|
|
|
|
|
|
2,181
|
|
2,331
|
|
|
Deferred income tax
benefit
|
|
|
|
|
|
(18,188)
|
|
(8,385)
|
|
|
Stock compensation
expense
|
|
|
|
|
|
13,974
|
|
11,033
|
|
|
Provision for
doubtful accounts
|
|
|
|
|
|
267
|
|
7
|
|
|
Loss on disposal of
property, plant & equipment
|
|
|
|
|
|
5,877
|
|
412
|
|
|
Loss on
investments
|
|
|
|
|
|
1,709
|
|
1,674
|
|
|
Excess tax benefits
from stock-based compensation plans
|
|
|
|
|
|
(16,437)
|
|
(10,457)
|
|
Changes in operating
assets & liabilities, net of effects of acquisitions
and
disposals:
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
|
|
|
(221,582)
|
|
(94,508)
|
|
|
Other
receivables
|
|
|
|
|
|
(6,995)
|
|
(7,254)
|
|
|
Inventory
|
|
|
|
|
|
28,786
|
|
44,071
|
|
|
Accounts payable and
accrued liabilities
|
|
|
|
|
|
56,688
|
|
(40,699)
|
|
|
Prepaids and other,
net
|
|
|
|
|
|
(6,405)
|
|
3,973
|
|
|
|
Net cash (used in)
provided by operating activities
|
|
|
|
|
|
(63,263)
|
|
26,993
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities:
|
|
|
|
|
|
|
|
|
|
Purchases of
investments
|
|
|
|
|
|
(11,063)
|
|
(21,240)
|
|
Sales of
investments
|
|
|
|
|
|
10,169
|
|
11,175
|
|
Purchases of
property, plant & equipment
|
|
|
|
|
|
(10,919)
|
|
(12,924)
|
|
Proceeds from
sale-leaseback transaction
|
|
|
|
|
|
24,960
|
|
-
|
|
Purchase of
intangible assets
|
|
|
|
|
|
(34,340)
|
|
-
|
|
Other, net
|
|
|
|
|
|
2,904
|
|
17
|
|
|
|
Net cash used in
investing activities
|
|
|
|
|
|
(18,289)
|
|
(22,972)
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities:
|
|
|
|
|
|
|
|
|
|
Proceeds from
sale-leaseback financing transaction
|
|
|
|
|
|
58,729
|
|
-
|
|
Payment of debt
obligations
|
|
|
|
|
|
(13,750)
|
|
(13,750)
|
|
Repurchase of common
stock
|
|
|
|
|
|
(24,999)
|
|
-
|
|
Excess income tax
benefits from stock-based compensation plans
|
|
|
|
|
|
16,437
|
|
10,457
|
|
Repurchase of shares
to satisfy employee minimum tax withholdings
|
|
|
|
|
|
(21,194)
|
|
(6,239)
|
|
Proceeds from
issuance of common stock, net
|
|
|
|
|
|
21
|
|
3,780
|
|
|
|
Net cash provided
by (used in) financing activities
|
|
|
|
|
|
15,244
|
|
(5,752)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
|
|
|
|
(66,308)
|
|
(1,731)
|
Cash and cash
equivalents at beginning of period
|
|
|
|
|
|
565,790
|
|
442,438
|
Cash and cash
equivalents at end of period
|
|
|
|
|
|
$ 499,482
|
|
$ 440,707
|
ARRIS GROUP,
INC.
|
PRELIMINARY
SUPPLEMENTAL SALES & NET INCOME RECONCILIATION
|
(in thousands,
except per share data) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2014
|
|
Q4 2014
|
|
Q1 2015
|
|
|
|
|
Per
Diluted
|
|
|
|
Per
Diluted
|
|
|
|
Per
Diluted
|
|
|
Amount
|
|
Share
|
|
Amount
|
|
Share
|
|
Amount
|
|
Share
|
|
Sales
|
$ 1,225,017
|
|
|
|
$ 1,263,387
|
|
|
|
$ 1,215,158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Highlighted
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition
accounting impacts of deferred revenue
|
206
|
|
|
|
616
|
|
|
|
-
|
|
|
|
Sales excluding
highlighted items
|
$ 1,225,223
|
|
|
|
$ 1,264,003
|
|
|
|
$ 1,215,158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2014
|
|
Q4 2014
|
|
Q1 2015
|
|
|
|
|
Per
Diluted
|
|
|
|
Per
Diluted
|
|
|
|
Per
Diluted
|
|
|
Amount
|
|
Share
|
|
Amount
|
|
Share
|
|
Amount
|
|
Share
|
|
Net income
(loss)
|
$ 40,800
|
|
$
0.28
|
|
$ 192,761
|
|
$
1.29
|
|
$ 19,126
|
|
$
0.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Highlighted
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
Impacting gross
margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation
expense
|
1,275
|
|
0.01
|
|
1,782
|
|
0.01
|
|
1,791
|
|
0.01
|
|
Acquisition
accounting impacts of deferred revenue
|
199
|
|
-
|
|
400
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impacting
operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Integration,
acquisition, restructuring and integration costs
|
11,502
|
|
0.08
|
|
3,252
|
|
0.02
|
|
898
|
|
0.01
|
|
Amortization of
intangible assets
|
64,001
|
|
0.43
|
|
56,685
|
|
0.38
|
|
57,147
|
|
0.38
|
|
Stock compensation
expense
|
9,758
|
|
0.07
|
|
12,206
|
|
0.08
|
|
12,183
|
|
0.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impacting other
(income) / expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment on
Investments
|
-
|
|
-
|
|
50
|
|
-
|
|
-
|
|
-
|
|
Liability related to
foreign tax credit benefits
|
-
|
|
-
|
|
20,492
|
|
0.14
|
|
-
|
|
-
|
|
Asset held for sale
impairment
|
-
|
|
-
|
|
7
|
|
-
|
|
-
|
|
-
|
|
Loss on sale of
building
|
-
|
|
-
|
|
-
|
|
-
|
|
5,142
|
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impacting income
tax expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net tax
items
|
(58,850)
|
|
(0.40)
|
|
(171,706)
|
|
(1.15)
|
|
(30,533)
|
|
(0.20)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total highlighted
items
|
27,885
|
|
0.19
|
|
(76,832)
|
|
(0.52)
|
|
46,628
|
|
0.31
|
|
Net income excluding
highlighted items
|
$ 68,685
|
|
$
0.47
|
|
$ 115,929
|
|
$
0.78
|
|
$ 65,754
|
|
$
0.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares - diluted
|
|
|
147,152
|
|
|
|
149,124
|
|
|
|
148,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to GAAP and
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:
Acquisition Accounting Impacts Related to Deferred
Revenue: In connection with our acquisitions of Motorola
Home, 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 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.
Integration, Acquisition, Restructuring and Other Costs:
We have excluded the effect of acquisition, integration, and other
expenses and the effect of restructuring expenses in calculating
our non-GAAP operating expenses and net income measures. We will
incur significant expenses in connection with our recent
acquisition of Motorola Home, which we generally would not
otherwise incur in the periods presented as part of our continuing
operations. Acquisition and integration expenses consist of
transaction costs, costs for transitional employees, other acquired
employee related costs, and integration related outside services.
Restructuring expenses consist of employee severance, abandoned
facilities, and other exit costs. Additionally, we have excluded
the effect of a loss on the sale of a product line in calculating
our non-GAAP operating expenses and net income measures. 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 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.
Loss on Sale of Building: In the first quarter of 2015,
the Company sold land and a building that qualified for
sale-leaseback accounting and was classified as an operating
lease. A loss has been recorded on the sale. We have
excluded the effect of the loss on sale of property in calculating
our non-GAAP financial measures. We believe it is useful to
understand the effect of excluding this item when evaluating our
ongoing performance.
Liability Related to Foreign Tax Credit Benefits: In
connection with our acquisition of Motorola Home, we have obtained
certain foreign tax credit benefits for which we have recorded a
liability to Google resulting from certain provisions in the
acquisition agreement. The expense related to this liability
has been recorded as part of other expense (income). We have
excluded the effect of the expense in the calculation of our
non-GAAP financial measures. We believe it is useful to
understand the effects of this item on our total other expense
(income).
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).
Asset Held for Sale Impairment: In the second quarter of
2014, we entered into a contract to facilitate the sale of a
building at less than its carrying value. The asset has been
reclassified as held for sale and was measured at the lower of its
carrying amount or fair value less cost to sell. We have
recorded an initial impairment charge to reduce the assets carrying
amount to its fair value less costs to sell in the period the
held for sale criteria were met. We have excluded the effect of the
asset held for sale impairment 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).
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 tax and
legal restructuring, state valuation allowances, research and
development tax credits and provision to return differences.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/arris-announces-preliminary-and-unaudited-first-quarter-2015-results-300074541.html
SOURCE ARRIS Group, Inc.