EXHIBIT 99.1
FOR IMMEDIATE RELEASE CONTACT: Jim Bauer
Investor Relations
(678) 473-2647
jim.bauer@arrisi.com
ARRIS ANNOUNCES FIRST QUARTER RESULTS
REVENUES AND EARNINGS INCREASE SEQUENTIALLY
OVER PRIOR PERIOD
DULUTH, GA. (APRIL 24, 2002) ARRIS (NASDAQ:ARRS) today announced financial
results for first quarter of 2002.
FINANCIAL HIGHLIGHTS:
- First quarter revenues were $191.6 million, up 4%
sequentially, exceeding previous guidance
- Cash earnings (net income plus intangible amortization) per
share, excluding unusual charges, were $0.04, exceeding
previous guidance and up from breakeven $0.00 in the prior
quarter
- Gross margins, excluding unusual charges, increased over 160
basis points to 31.4%
- Cash flow from operations was $23.7 million
- Inventory turns increased to 3.0 from 2.4 in the prior quarter
- Zero drawn down on revolving credit facility with $27.4
million cash and equivalents on hand
FINANCIAL DETAILS:
Revenues of $191.6 million in the quarter were ahead of previously provided
guidance as indicated in and in line with the Company's April 8, 2002
pre-announcement and compare favorably with revenues of $183.5 million in the
prior quarter. Net loss for the first quarter was ($1.9) million, or ($0.02) per
share. These results compare to a loss per share of ($0.18) in the fourth
quarter of 2001. Cash earnings per diluted share were $0.04 excluding a $3.5
million positive effect of unusual items as discussed below.
Sales of Broadband (cable telephony & internet access) products during the
quarter were $114.2 million and compare to $109.8 million in the prior quarter
and $103.0 million in the first quarter of 2001. Sales of Transmission, Optical
& Outside Plant products during the quarter were $46.4 million as compared to
$44.9 million in the prior quarter and $66.7 million in the first quarter of
2001. Sales of Supplies & Services products were $31.0 million during the
quarter and compare with $28.8 million during the prior quarter and $43.1
million in the first quarter of 2001.
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International sales of $46.3 million in the quarter were slightly less than
fourth quarter 2001 sales of $47.8 million. Sales to AT&T Broadband were $52.1
million in the quarter, as compared to $50.0 million in the prior quarter.
Backlog at quarter end was $122 million compared to $133 million at the end of
the fourth quarter. Bookings in the quarter were $180.7 million, while the
book-to-bill ratio was .94.
The Company produced operating cash flow of $23.7 million during the first
quarter 2002, which is the fifth sequential quarter that the Company has had
positive cash flow from operations. Inventory turns improved to 3.0 in the first
quarter up from 2.4 in the fourth quarter of 2001. DSO's also improved quarter
over quarter ending the first quarter at 65 days, down 3 days from the fourth
quarter 2001. The Company had no amounts outstanding on its revolver credit
facility and had $27.4 million of cash and equivalents on hand at quarter end.
The unusual items during the quarter predominantly consisted of two items: 1) a
$6.8 million income tax benefit as a result of a change in tax legislation,
allowing ARRIS to carry back losses for five years versus the previous limit of
two years, and, 2) as we continued to examine methods to decrease our cost
structure, we reduced our workforce by approximately 90 people and recorded
severance charges of approximately $3.1 million.
"Both ARRIS and our industry appear to be returning to a more stable
environment after several quarters of disruption," said Bob Stanzione, ARRIS
President & CEO. "During the first quarter we have continued to build on our
commitment to return to profitability and to improve our balance sheet, while at
the same time investing in our future. In addition to delivering cash earnings
per share that exceeded our previous guidance, we have also seen two quarters of
sequential overall revenue growth and continuing solid demand for our constant
bit rate (CBR) cable telephony products. Further, we also see a growing interest
in our new DOCSIS 1.1 certified products for VoIP and advanced high speed data
applications, both domestically and internationally," continued Stanzione. "At
the same time our Cornerstone CMTS and Touchstone Telephony Modem received yet a
second round of CableLabs certification for new enhanced software, thereby
extending the market lead that these products had since their initial
certification in 2001. We are still the only company that has DOCSIS 1.1
certified products at both ends of the HFC network. In summary, I am very
pleased about our position. We have the right products, the right customers and
the right resources to take advantage of an improving marketplace," concluded
Stanzione.
"Again this quarter we are very pleased with the ongoing progress that we have
made regarding revenue, cash earnings and overall improvements in our balance
sheet," said Larry Margolis, ARRIS EVP & CFO. "However, like many other
companies in our sector, we are going to provide guidance for only the current
quarter. We anticipate that revenues for the second quarter will be in the $195
million to $205 million range with a cash profit, before unusual items, of $0.04
to $0.06 per diluted share. Margolis continued, "Regarding the balance sheet, we
are well along with our plans to retire our $115 million convertible notes. On
April 12, 2002, we launched a 3(a)(9) exchange offer for up to $70 million of
the notes. That action, coupled with prior private exchanges of nearly $10
million of the notes for common stock, and the $30 million pending sale of our
Keptel division, should provide the means to successfully retire the convertible
notes."
ARRIS has scheduled a conference call to discuss first quarter financial results
at 8:30am EDT on Thursday April 25, 2002. The call may be accessed by dialing
877-280-4008 and asking for the ARRIS Conference Call with Jim Bauer as the
moderator. The call will also be webcast at www.streetevents.com using the
ticker symbol ARRS. A replay of the conference call will be available through
Monday, April 29, 2002 at 877-519-4471, PIN # 32113060.
ARRIS is a leading provider of innovative broadband local access networks and
high-speed data and telephony systems for the delivery of voice, video and data
to the home and business. From
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the network to the subscriber, ARRIS provides complete solutions that add
reliability and value. Headquartered in Duluth, Georgia, USA, ARRIS has design,
engineering, manufacturing, distribution, and sales office locations throughout
the world. Information about ARRIS products and services can be found at
www.arrisi.com.
Forward-looking statements:
Certain information and statements contained in this press release constitute
forward-looking statements with respect to the financial condition, results of
operations, and business of ARRIS. Statements that are based on current
expectations, estimates, forecasts, and projections about the markets in which
the Company operates and management's beliefs and assumptions regarding these
markets are forward-looking statements. The Company cautions that any
forward-looking statements made are not guarantees of future performance and
projected savings from the changes being implemented by the Company are based on
preliminary estimates.
Statements made in this press release, including those related to:
- projected results for the second quarter 2002,
- the impact of outsourcing manufacturing, including realization
of expected savings,
- the outlook for the overall equipment industry market,
- achievement and timing of profitable results based on
management's actions,
- the market acceptance of new products;
- and the timing of retirement of ARRIS debt issues
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 second quarter 2002 are based on
preliminary estimates, assumptions and projections,
- ARRIS is dependent on capital expenditures by cable operators,
which, in turn, are dependent on consumer demand, capital
markets and industry consolidation among other factors,
- because the market in which ARRIS operates is dynamic, 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,
- the depth of the Company's R&D capabilities is dependent on
its ability to fund new technologies and react or anticipate
movements in industry standards,
- Individual convertible note holders will have to decide if
they will exchange convertible notes for common stock; the
Company cannot predict the actual amount of notes to be
converted.
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, 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. In providing forward-looking
statements, the Company is not undertaking any obligation to update publicly or
otherwise these statements, whether as a result of new information, future
events or otherwise.
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ARRIS GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS)
MARCH 31, DECEMBER 31,
2002 2001
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 27,357 $ 5,337
Accounts receivable, net 97,541 83,224
Accounts receivable from AT&T 28,415 35,915
Accounts receivable from Nortel 8,299 18,857
Other receivables 12,525 10,049
Inventories 166,174 187,971
Income taxes recoverable 12,853 5,066
Investment held for resale 581 795
Other current assets 23,857 22,110
----------- -----------
Total current assets 377,602 369,324
Property, plant and equipment, net 52,516 52,694
Goodwill 287,261 259,062
Intangibles 91,734 44,488
Investments 14,079 14,037
Other assets 10,279 12,510
----------- -----------
$ 833,471 $ 752,115
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 41,806 $ 18,620
Accrued compensation, benefits and related taxes 28,272 32,747
Accounts payable and accrued expenses - Nortel 13,042 21,373
Other accrued liabilities 47,240 45,722
----------- -----------
Total current liabilities 130,360 118,462
Long-term debt - Revolver -- --
Long-term debt - 4 1/2% Convertible Notes 115,000 115,000
----------- -----------
Total liabilities 245,360 233,462
Membership interest - Nortel 106,610 104,110
----------- -----------
Total liabilities & membership interest 351,970 337,572
Stockholders' equity:
Preferred stock -- --
Common stock 807 755
Capital in excess of par value 578,829 507,650
Unearned compensation (2,618) (577)
Unrealized holding loss on marketable securities (3,170) (3,211)
Retained earnings (deficit) (92,096) (90,162)
Cumulative translation adjustments (251) 88
----------- -----------
Total stockholders' equity 481,501 414,543
----------- -----------
$ 833,471 $ 752,115
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