SUWANEE, Ga., Feb. 17, 2016 /PRNewswire/ -- ARRIS International
plc (NASDAQ: ARRS) today announced preliminary and unaudited
financial results for the fourth quarter and full year 2015.
Financial Highlights
- Revenues were $1,101.7
million
- Adjusted net income (a non-GAAP measure) was $0.62 per diluted share, which includes a
$0.14 per diluted share benefit
related to research & development tax credits
- GAAP net income was $0.20 per
diluted share
- Ended 2015 with $879.1 million of
cash resources
- Order backlog was $715.8
million
- Book-to-bill ratio was 1.14
- Approved $300 million share
repurchase program
"Our fourth quarter sales were in line with our expectations,
and our earnings were stronger than anticipated as a result of
stronger CCAP E6000 sales, as well as the full year impact of
R&D tax credits enacted by Congress late in the year," said Bob
Stanzione, ARRIS Chairman and CEO. "We closed the Pace
acquisition on January 4 and have
made substantial progress on our integration activities. With
respect to the first quarter 2016, we project that revenues for the
Company will be in the range of $1,560 to
$1,610 million, with adjusted net income per diluted share
in the range of $0.37 to $0.42 and
GAAP net income per diluted share in the range of $0.01 to $0.06."
The Company also announced that on February 16, 2016, the Board of Directors of
ARRIS approved a new $300 million
share repurchase authorization replacing all prior programs.
ARRIS will host its 2016 Investor & Analyst Day on
Wednesday, March 16 at The Westin at
Times Square, New York City. The event, which is open to
investors and analysts, will begin at 7:30 a.m.
Eastern with breakfast and registration. Presentations will
begin at 8:00 am and conclude at approximately 12:00
pm. A live audio webcast of the conference with slide
presentations will be accessible via the Investors section of
Company's web site: www.arris.com. Registration for the event
can be found at www.etouches.com/161362.
Revenues in the fourth quarter 2015 were $1,101.7 million as compared to fourth quarter
2014 revenues of $1,263.4 million.
Third quarter 2015 revenues were $1,221.4
million.
For the full year 2015 and 2014, revenues were $4,798.3 million and $5,322.9 million, respectively.
Adjusted net income (a non-GAAP measure) in the fourth
quarter 2015 was $0.62 per diluted
share, compared to $0.78 per diluted
share for the fourth quarter 2014. Adjusted net income (a
non-GAAP measure) for the third quarter 2015 was $0.56 per diluted share. The
fourth quarter 2015 adjusted net income includes a $0.14 benefit related to the full year impact of
research & development tax credits resulting from Congress
passing legislation in December
2015.
Full year, adjusted net income was $2.16 per diluted share for 2015 as compared to
$2.76 per diluted share in 2014.
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 web site (www.arris.com).
GAAP net income in the fourth quarter 2015 was
$0.20 per diluted share, as compared
to fourth quarter 2014 GAAP net income of $1.29 per diluted share and third quarter 2015
GAAP net income of $0.18 per diluted
share. The fourth quarter 2015 GAAP net income includes a net
$0.14 benefit associated with the
full year impact of research & development tax credits.
Full year, GAAP net income was $0.62 per diluted share in 2015 as compared to
GAAP net income of $2.21 per diluted
share in 2014.
Cash & Cash Equivalents - The Company ended the
fourth quarter 2015 with $879.1
million of cash resources, which includes cash, cash
equivalents and short-term investments, as compared to $781.1 million, in the aggregate, at the end of
the third quarter 2015. The Company generated $127.4 million of cash from operating activities
during the fourth quarter 2015, as compared to $130.0 million generated during the fourth
quarter 2014. During the full year of 2015, the Company
generated $351.9 million of cash from
operating activities, which compares to $459.3 million generated during 2014.
Order backlog at the end of the fourth quarter 2015 was
$715.8 million as compared to
$631.0 million and $559.0 million at the end of the fourth quarter
2014 and the third quarter 2015, respectively. The Company's
book-to-bill ratio in the fourth quarter 2015 was 1.14 as compared
to the fourth quarter 2014 of 1.03 and the third quarter 2015 of
0.92.
ARRIS management will conduct a conference call at 5:00 pm Eastern, today, Wednesday, February 17, 2016, to discuss these
results in detail. You may participate in this conference call by
dialing 888-680-0879 or +1-617-213-4856 for international calls
prior to the start of the call and providing the ARRIS
International plc name, conference and Bob Puccini as the moderator, pass code 498 383
20. 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 February
24, 2016 by dialing 888-286-8010 or +1-617-801-6888 for
international calls and using the pass code 65231367. A replay also
will be made available for a period of 12 months following the
conference call on ARRIS's web site at www.arris.com.
About ARRIS
ARRIS International plc (NASDAQ:
ARRS) is a world leader in entertainment and communications
technology. Our innovations combine hardware, software, and
services across the cloud, network, and home to power TV and
Internet for millions of people around the globe. The people of
ARRIS collaborate with the world's top service providers,
content providers, and retailers to advance the state of our
industry and pioneer tomorrow's connected world. Together, we are
inventing the future. For more information,
visit www.arris.com.
Forward-Looking Statements
Statements made in this
press release, including those related to:
- revenues and net income for the first quarter 2016, and
beyond;
- integration of the recently acquired Pace business;
- 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 2016 as well as the
general outlook for 2016 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;
- the strengthening U.S. Dollar may adversely impact our
international customer's ability or willingness to purchase
products and the pricing of our products;
- ARRIS may fail to realize the expected benefits of the recently
completed Pace acquisition and may incur significant transaction
costs and/or unknown liabilities;
- regulatory changes, including those related to tax, could have
an adverse impact on our operations and results of operations;
- ARRIS's 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;
- 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
- announced transactions within our customer base, including the
proposed acquisition by Frontier Communications of several
properties owned by Verizon, the proposed acquisition of
Cablevision by Altice, and the announced acquisition of Time Warner
by Charter may have an impact on the amount and/or timing of
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; 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 Group,
Inc.'s reports (as predecessor registrant to ARRIS International
plc) filed with the Securities and Exchange Commission, including
its Form 10-Q for the quarter ended September 30, 2015. 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,
|
|
|
2015
|
|
2015
|
|
2015
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$863,582
|
|
$673,346
|
|
$490,939
|
|
$499,482
|
|
$565,790
|
Short-term
investments, at fair value
|
|
15,470
|
|
107,777
|
|
128,852
|
|
129,073
|
|
126,748
|
Total cash, cash
equivalents and short term investments
|
|
879,052
|
|
781,123
|
|
619,791
|
|
628,555
|
|
692,538
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable,
net
|
|
651,893
|
|
647,726
|
|
785,869
|
|
819,918
|
|
598,603
|
Other
receivables
|
|
12,233
|
|
8,684
|
|
11,268
|
|
15,054
|
|
10,640
|
Inventories,
net
|
|
401,592
|
|
367,536
|
|
389,556
|
|
372,379
|
|
401,165
|
Prepaid income
taxes
|
|
25,624
|
|
29,071
|
|
26,413
|
|
13,380
|
|
11,023
|
Prepaids
|
|
19,319
|
|
26,430
|
|
36,746
|
|
31,814
|
|
27,497
|
Current deferred
income tax assets
|
|
-
|
|
104,345
|
|
105,384
|
|
115,926
|
|
113,390
|
Other current
assets
|
|
120,490
|
|
148,385
|
|
102,987
|
|
73,842
|
|
55,257
|
Total current
assets
|
|
2,110,203
|
|
2,113,300
|
|
2,078,014
|
|
2,070,868
|
|
1,910,113
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
312,311
|
|
319,443
|
|
324,154
|
|
325,727
|
|
366,431
|
Goodwill
|
|
1,013,963
|
|
1,016,696
|
|
1,017,430
|
|
938,645
|
|
936,067
|
Intangible assets,
net
|
|
810,448
|
|
868,054
|
|
923,837
|
|
919,876
|
|
943,388
|
Investments
|
|
69,542
|
|
74,924
|
|
75,381
|
|
76,492
|
|
77,640
|
Noncurrent deferred
income tax assets
|
|
180,526
|
|
70,557
|
|
87,291
|
|
88,366
|
|
71,686
|
Other
assets
|
|
21,610
|
|
26,843
|
|
27,842
|
|
28,185
|
|
35,717
|
|
|
$4,518,603
|
|
$4,489,817
|
|
$4,533,949
|
|
$4,448,159
|
|
$4,341,042
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$514,877
|
|
$558,371
|
|
$608,133
|
|
$594,690
|
|
$480,150
|
Accrued compensation,
benefits and related taxes
|
|
111,389
|
|
97,326
|
|
78,333
|
|
75,849
|
|
145,278
|
Accrued
warranty
|
|
27,630
|
|
35,488
|
|
29,176
|
|
36,824
|
|
42,763
|
Deferred
revenue
|
|
137,606
|
|
97,490
|
|
107,632
|
|
107,230
|
|
92,772
|
Current portion of LT
debt & financing lease obligations
|
|
43,591
|
|
43,506
|
|
43,446
|
|
75,685
|
|
67,024
|
Current income taxes
liability
|
|
8,368
|
|
13,139
|
|
9,587
|
|
13,092
|
|
10,610
|
Other accrued
liabilities
|
|
169,169
|
|
168,870
|
|
155,482
|
|
167,430
|
|
165,080
|
Total current
liabilities
|
|
1,012,630
|
|
1,014,190
|
|
1,031,789
|
|
1,070,800
|
|
1,003,677
|
Long-term debt &
financing lease obligations, net of current portion
|
|
1,496,243
|
|
1,507,172
|
|
1,518,063
|
|
1,487,547
|
|
1,448,960
|
Accrued
pension
|
|
64,052
|
|
67,570
|
|
68,865
|
|
68,060
|
|
64,917
|
Noncurrent income
taxes payable
|
|
37,284
|
|
38,145
|
|
43,586
|
|
42,282
|
|
41,082
|
Noncurrent deferred
income tax liabilities
|
|
503
|
|
329
|
|
332
|
|
412
|
|
274
|
Other noncurrent
liabilities
|
|
66,930
|
|
71,560
|
|
92,544
|
|
90,428
|
|
91,371
|
Total
liabilities
|
|
2,677,642
|
|
2,698,966
|
|
2,755,179
|
|
2,759,529
|
|
2,650,281
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Common
stock
|
|
1,790
|
|
1,819
|
|
1,814
|
|
1,811
|
|
1,796
|
Capital in excess of
par value
|
|
1,777,276
|
|
1,762,111
|
|
1,765,804
|
|
1,745,345
|
|
1,739,700
|
Treasury stock at
cost
|
|
(331,329)
|
|
(331,329)
|
|
(331,329)
|
|
(331,329)
|
|
(306,330)
|
Accumulated other
comprehensive loss
|
|
(12,646)
|
|
(20,236)
|
|
(12,664)
|
|
(12,966)
|
|
(11,047)
|
Retained
earnings
|
|
358,823
|
|
328,782
|
|
302,525
|
|
285,768
|
|
266,642
|
Total ARRIS Group
Inc. stockholders' equity
|
|
1,793,914
|
|
1,741,147
|
|
1,726,150
|
|
1,688,629
|
|
1,690,761
|
Stockholders' equity
attributable to noncontrolling interest
|
|
47,047
|
|
49,704
|
|
52,620
|
|
-
|
|
-
|
Total stockholders'
equity
|
|
1,840,961
|
|
1,790,851
|
|
1,778,770
|
|
1,688,629
|
|
1,690,761
|
|
|
$4,518,603
|
|
$4,489,817
|
|
$4,533,949
|
|
$4,448,159
|
|
$4,341,042
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
Net sales
|
$1,101,681
|
|
$1,263,388
|
|
$4,798,332
|
|
$5,322,921
|
Cost of
sales
|
743,008
|
|
882,812
|
|
3,379,409
|
|
3,740,425
|
Gross
margin
|
358,673
|
|
380,576
|
|
1,418,923
|
|
1,582,496
|
Operating
expenses:
|
|
|
|
|
|
|
|
Selling, general, and
administrative expenses
|
107,866
|
|
95,576
|
|
417,085
|
|
410,568
|
Research and
development expenses
|
133,236
|
|
135,498
|
|
534,168
|
|
556,575
|
Amortization of
intangible assets
|
56,378
|
|
56,686
|
|
227,440
|
|
236,521
|
Integration,
acquisition, restructuring and other costs
|
8,281
|
|
3,251
|
|
29,277
|
|
37,498
|
|
305,761
|
|
291,011
|
|
1,207,970
|
|
1,241,162
|
Operating
income
|
52,912
|
|
89,565
|
|
210,953
|
|
341,334
|
Other expense
(income):
|
|
|
|
|
|
|
|
Interest
expense
|
14,367
|
|
13,860
|
|
70,936
|
|
62,901
|
(Gain) loss on
investments
|
(345)
|
|
(317)
|
|
6,220
|
|
10,961
|
Loss (gain) on
foreign currency
|
16,557
|
|
(1,123)
|
|
20,761
|
|
2,637
|
Interest
income
|
(587)
|
|
(652)
|
|
(2,379)
|
|
(2,590)
|
Other (income)
expense, net
|
3,192
|
|
21,666
|
|
8,362
|
|
28,195
|
Income before income
taxes
|
19,728
|
|
56,131
|
|
107,053
|
|
239,230
|
Income tax (benefit)
expense
|
(7,116)
|
|
(136,630)
|
|
22,594
|
|
(87,981)
|
Consolidated net
income
|
26,844
|
|
192,761
|
|
84,459
|
|
327,211
|
Net loss attributable
to noncontrolling interests
|
(3,197)
|
|
-
|
|
(7,722)
|
|
-
|
Net income
attributable to ARRIS Group, Inc.
|
$30,040
|
|
$192,761
|
|
$92,181
|
|
$327,211
|
|
|
|
|
|
|
|
|
Net income per common
share (1):
|
|
|
|
|
|
|
|
Basic
|
$
0.20
|
|
$ 1.33
|
|
$
0.63
|
|
$ 2.27
|
Diluted
|
$
0.20
|
|
$ 1.29
|
|
$
0.62
|
|
$ 2.21
|
|
|
|
|
|
|
|
|
Weighted average
common shares:
|
|
|
|
|
|
|
|
Basic
|
147,109
|
|
145,281
|
|
146,388
|
|
144,386
|
Diluted
|
149,842
|
|
149,124
|
|
149,359
|
|
148,280
|
|
|
|
|
|
|
|
|
(1)
Calculated based on net income attributable to shareowners of ARRIS
Group, Inc.
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Activities:
|
|
|
|
|
|
|
|
|
|
Consolidated net
income
|
|
$
26,844
|
|
$ 192,761
|
|
$
84,459
|
|
$ 327,211
|
|
|
Depreciation
|
|
17,537
|
|
18,775
|
|
71,780
|
|
78,988
|
|
|
Amortization of
intangible assets
|
|
57,606
|
|
56,916
|
|
231,590
|
|
236,751
|
|
|
Amortization of
deferred finance fees and debt discount
|
|
1,671
|
|
2,199
|
|
9,646
|
|
11,575
|
|
|
Deferred income tax
provision (benefit)
|
|
(9,857)
|
|
(143,982)
|
|
5,111
|
|
(163,485)
|
|
|
Stock compensation
expense
|
|
17,662
|
|
13,987
|
|
64,218
|
|
53,799
|
|
|
Provision for
doubtful accounts
|
|
744
|
|
51
|
|
2,997
|
|
5,336
|
|
|
Loss (gain) on
disposal of fixed assets
|
|
1,718
|
|
1,119
|
|
7,776
|
|
4,247
|
|
|
Loss (gain) on
investments
|
|
(345)
|
|
(318)
|
|
6,220
|
|
10,961
|
|
|
Excess tax benefits
from stock-based compensation plans
|
|
(3,643)
|
|
5,692
|
|
(3,997)
|
|
(8,959)
|
|
Changes in operating
assets & liabilities, net of effects of acquisitions and
disposals:
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
(4,911)
|
|
86,068
|
|
(55,132)
|
|
16,796
|
|
|
Other
receivables
|
|
(6,766)
|
|
7,468
|
|
(6,017)
|
|
(2,997)
|
|
|
Inventory
|
|
(34,056)
|
|
(32,537)
|
|
(6,685)
|
|
(71,036)
|
|
|
Income taxes
payable/recoverable
|
|
(2,185)
|
|
(1,385)
|
|
(23,488)
|
|
29,617
|
|
|
Accounts payable and
accrued liabilities
|
|
8,937
|
|
(119,774)
|
|
15,065
|
|
(116,909)
|
|
|
Prepaids and other,
net
|
|
56,429
|
|
43,005
|
|
(51,660)
|
|
47,386
|
|
|
|
Net cash provided
by operating activities
|
|
127,385
|
|
130,045
|
|
351,883
|
|
459,281
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities:
|
|
|
|
|
|
|
|
|
|
Purchases of
investments
|
|
(8,952)
|
|
(94,734)
|
|
(56,577)
|
|
(127,780)
|
|
Sales of
investments
|
|
100,399
|
|
30,360
|
|
161,824
|
|
59,679
|
|
Purchases of
property, plant & equipment, net
|
|
(12,192)
|
|
(14,829)
|
|
(49,890)
|
|
(56,588)
|
|
Proceeds from
sale-leaseback transaction
|
|
-
|
|
-
|
|
24,960
|
|
-
|
|
Acquisition, net of
cash acquired
|
|
-
|
|
-
|
|
(97,905)
|
|
84
|
|
Purchases of
intangible assets
|
|
(2,000)
|
|
-
|
|
(39,340)
|
|
-
|
|
Other, net
|
|
-
|
|
-
|
|
2,971
|
|
19
|
|
|
|
Net cash provided
by (used in) investing activities
|
|
77,255
|
|
(79,203)
|
|
(53,957)
|
|
(124,586)
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities:
|
|
|
|
|
|
|
|
|
|
Proceeds from
sale-leaseback financing transaction
|
|
-
|
|
-
|
|
58,729
|
|
-
|
|
Payment of financing
lease obligation
|
|
(161)
|
|
-
|
|
(425)
|
|
-
|
|
Payment of debt
obligations
|
|
(12,375)
|
|
(13,750)
|
|
(53,500)
|
|
(209,653)
|
|
Payment for debt
discount
|
|
-
|
|
-
|
|
(3,247)
|
|
-
|
|
Payment for deferred
financing costs
|
|
-
|
|
-
|
|
(4,992)
|
|
-
|
|
Repurchase of common
stock
|
|
-
|
|
-
|
|
(24,999)
|
|
-
|
|
Excess income tax
benefits from stock-based compensation plans
|
|
3,643
|
|
(5,692)
|
|
3,997
|
|
8,959
|
|
Repurchase of shares
to satisfy employee minimum tax withholdings
|
|
(14,228)
|
|
(240)
|
|
(46,680)
|
|
(29,845)
|
|
Fees and proceeds
from issuance of common stock, net
|
|
8,173
|
|
7,631
|
|
16,189
|
|
19,196
|
|
Capital contribution
from non-controlling interest
|
|
544
|
|
-
|
|
54,794
|
|
-
|
|
|
|
Net cash used in
financing activities
|
|
(14,404)
|
|
(12,051)
|
|
(134)
|
|
(211,343)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in
cash and cash equivalents
|
|
190,236
|
|
38,791
|
|
297,792
|
|
123,352
|
Cash and cash
equivalents at beginning of period
|
|
673,346
|
|
526,999
|
|
565,790
|
|
442,438
|
Cash and cash
equivalents at end of period
|
|
$ 863,582
|
|
$ 565,790
|
|
$ 863,582
|
|
$ 565,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARRIS GROUP,
INC.
|
PRELIMINARY
SUPPLEMENTAL SALES & NET INCOME RECONCILIATION
|
(in thousands,
except per share data) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except
per share data)
|
Q4 2014
|
|
Q3 2015
|
|
Q4 2015
|
|
Dec YTD
2014
|
|
Dec YTD
2015
|
|
|
|
|
Per
Diluted
|
|
|
|
Per
Diluted
|
|
|
|
Per
Diluted
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
Share
|
|
Amount
|
|
Share
|
|
Amount
|
|
Share
|
|
Amount
|
|
|
|
Amount
|
|
|
|
Sales
|
$ 1,263,387
|
|
|
|
$ 1,221,416
|
|
|
|
$ 1,101,681
|
|
|
|
$ 5,322,920
|
|
|
|
$ 4,798,332
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Highlighted
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition
accounting impacts of deferred revenue
|
616
|
|
|
|
|
|
|
|
|
|
|
|
$ 5,091
|
|
|
|
$
-
|
|
|
|
Sales excluding
highlighted items
|
$ 1,264,003
|
|
|
|
$ 1,221,416
|
|
|
|
$ 1,101,681
|
|
|
|
$ 5,328,011
|
|
|
|
$ 4,798,332
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 2014
|
|
Q3 2015
|
|
Q4 2015
|
|
Dec YTD
2014
|
|
Dec YTD
2015
|
|
|
|
|
Per
Diluted
|
|
|
|
Per
Diluted
|
|
|
|
Per
Diluted
|
|
|
|
Per
Diluted
|
|
|
|
Per
Diluted
|
|
|
Amount
|
|
Share
|
|
Amount
|
|
Share
|
|
Amount
|
|
Share
|
|
Amount
|
|
Share
|
|
Amount
|
|
Share
|
|
Net income
attributable to ARRIS Group, Inc.
|
$ 192,761
|
|
$
1.29
|
|
$ 26,257
|
|
$
0.18
|
|
$ 30,040
|
|
$
0.20
|
|
$ 327,211
|
|
$
2.21
|
|
$ 92,181
|
|
$
0.62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Highlighted
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impacting gross
margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation
expense
|
1,782
|
|
0.01
|
|
2,284
|
|
0.02
|
|
2,219
|
|
0.01
|
|
6,716
|
|
0.05
|
|
8,508
|
|
0.06
|
|
Acquisition
accounting impacts of deferred revenue
|
400
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
3,448
|
|
0.02
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impacting
operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Integration,
acquisition, restructuring and other costs
|
3,251
|
|
0.02
|
|
7,531
|
|
0.05
|
|
8,281
|
|
0.06
|
|
37,498
|
|
0.25
|
|
29,277
|
|
0.20
|
|
Amortization of
intangible assets
|
56,686
|
|
0.38
|
|
57,132
|
|
0.38
|
|
56,378
|
|
0.38
|
|
236,521
|
|
1.60
|
|
227,440
|
|
1.52
|
|
Stock compensation
expense
|
12,206
|
|
0.08
|
|
14,005
|
|
0.09
|
|
15,443
|
|
0.10
|
|
47,084
|
|
0.32
|
|
55,710
|
|
0.37
|
|
Noncontrolling
interest share of non-GAAP adjustments
|
-
|
|
-
|
|
(791)
|
|
(0.01)
|
|
(1,357)
|
|
(0.01)
|
|
-
|
|
-
|
|
(2,947)
|
|
(0.02)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impacting other
(income) / expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment on
Investments
|
50
|
|
-
|
|
-
|
|
-
|
|
(159)
|
|
-
|
|
7,050
|
|
0.05
|
|
(9)
|
|
-
|
|
Debt amendment
fees
|
-
|
|
-
|
|
669
|
|
-
|
|
291
|
|
-
|
|
-
|
|
-
|
|
15,342
|
|
0.10
|
|
Credit facility -
ticking fees
|
-
|
|
-
|
|
678
|
|
-
|
|
1,022
|
|
0.01
|
|
-
|
|
-
|
|
1,700
|
|
0.01
|
|
Asset held for sale
impairment
|
7
|
|
-
|
|
|
|
-
|
|
-
|
|
-
|
|
2,132
|
|
0.01
|
|
-
|
|
-
|
|
Foreign exchange
contract (gains) losses related to cash consideration of Pace
acquisition
|
-
|
|
-
|
|
15,429
|
|
0.10
|
|
13,699
|
|
0.09
|
|
-
|
|
-
|
|
22,283
|
|
0.15
|
|
Liability/adjustment
related to foreign tax credit benefits
|
20,482
|
|
0.14
|
|
(3,669)
|
|
(0.02)
|
|
-
|
|
-
|
|
20,492
|
|
0.14
|
|
(3,669)
|
|
(0.02)
|
|
Loss on sale of
building
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
5,142
|
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
Impacting income
tax expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net tax
items
|
(171,706)
|
|
(1.15)
|
|
(35,845)
|
|
(0.24)
|
|
(32,363)
|
|
(0.22)
|
|
(279,135)
|
|
(1.88)
|
|
(128,863)
|
|
(0.86)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total highlighted
items
|
(76,842)
|
|
(0.52)
|
|
57,423
|
|
0.38
|
|
63,454
|
|
0.42
|
|
81,806
|
|
0.55
|
|
229,914
|
|
1.54
|
|
Net income excluding
highlighted items
|
$ 115,919
|
|
$
0.78
|
|
$ 83,680
|
|
$
0.56
|
|
$ 93,494
|
|
$
0.62
|
|
$ 409,017
|
|
$
2.76
|
|
$ 322,095
|
|
$
2.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares - diluted
|
|
|
149,124
|
|
|
|
149,422
|
|
|
|
149,842
|
|
|
|
148,280
|
|
|
|
149,359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 acquisition 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
incurred expenses in connection with the Active Video Joint
Venture, the Motorola Home acquisition, the anticipated Pace
acquisition and, 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 and
other costs consist of employee severance, abandoned facilities,
product line disposition 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 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.
Noncontrolling Interest share of Non-GAAP Adjustments: In the
second quarter of 2015, ARRIS and Charter formed a joint venture
that acquired Active Video Networks, Inc. ARRIS and Charter own 65%
and 35%, respectively, of the joint venture. The joint
venture is accounted for by ARRIS under the consolidation
method. As a result, the consolidated statement of operations
include the revenues, expenses, and gains and losses of the
noncontrolling interest. The amount of net income (loss)
related to the noncontrolling interest are reported and presented
separately in the consolidated statement of operations. We
have excluded the noncontrolling share of any non GAAP adjusted
measures recorded by the joint venture, as we believe it is useful
to understand the effect of excluding this item when evaluating our
ongoing performance.
Impairment of Investment: We have excluded the effect of
other-than-temporary impairments 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).
Debt Amendment Fees: In 2015, the Company amended its credit
agreement. This debt modification allowed us to improve the
terms and conditions of the credit agreement, extend the maturities
of certain loan facilities, increase the amount of the revolving
credit facility, and add a new term A-1 loan facility. It is our
intent that the new term A-1 loan facility be funded upon the
closing of the Pace acquisition. If the Pace acquisition does not
close, the entire facility is available to ARRIS so long as the
first $400 million drawn is used to
reduce other debt; the remaining $400
million can be used for general corporate purposes. Certain
fees related to the debt modification have already been paid, and
other fees related to the new term A-1 loan facility will be paid
upon funding. We believe it is useful to understand the
effect of this on our other expense (income).
Credit Facility - Ticking Fees: In connection with our
acquisition of Pace plc, the cash portion of the consideration was
funded through debt financing commitments. A ticking fee is a
fee paid to our banks to compensate for the time lag between the
commitment allocation on a loan and the actual funding. We have
excluded the effect of the ticking fee 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).
Liability / Adjustment 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 and
subsequent adjustments 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).
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).
Foreign Exchange Contract (Gains) Losses Related to Cash
Consideration of Pace Acquisition: In the second quarter of 2015,
the Company announced its intent to acquire Pace plc in exchange
for stock and cash. We subsequently entered into foreign
exchange forward contracts in order to hedge the foreign currency
risk associated with the cash consideration of the Pace
acquisition. These foreign exchange forward contracts were
not designated as hedges, and accordingly, all changes in the fair
value of these instruments are recognized as a loss (gain) on
foreign currency in the Consolidated Statements of
Operations. We believe it is useful to understand the effect
of this on our other expense (income).
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.
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.
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SOURCE ARRIS