EXHIBIT 99.1
FOR IMMEDIATE RELEASE CONTACT: Jim Bauer
Investor Relations
(678) 473-2647
jim.bauer@arrisi.com
ARRIS LOWERS GUIDANCE FOR
SECOND QUARTER 2003
(CONFERENCE CALL DETAILS INCLUDED BELOW)
DULUTH, GA. (JUNE 12, 2003) ARRIS (NASDAQ:ARRS), a global telecommunications
technology leader, today announced revised second quarter 2003 financial
guidance for the following reasons:
- Voice port sales during the quarter are expected to be
sharply lower as customers continue to reduce inventories and
shorten ordering lead times to "just in time" purchasing
patterns.
- Certain cable telephony customers have initiated field
inventory recovery programs that suppressed expected
purchasing activities during the quarter.
- Certain customers have temporarily delayed cable telephony
service launches in new cities that were anticipated to begin
this quarter.
- The Company's largest customer continues to work off excess
inventories of cable telephony equipment.
- Inventory recovery and cash conservation efforts by customers
continue, which are anticipated to suppress the normal
pattern of higher sales at the end of the quarter.
As a result, the Company now anticipates that revenues for the second quarter
will be in the range of $100 million to $105 million with net income (loss) in
the range of $(0.30) to $(0.33) per share inclusive of amortization of
intangibles. The $(0.30) to $(0.33) loss includes expected charges of
approximately $(0.05) per share for actions that the Company is planning to
implement to reduce expenses and lower its breakeven point. Earnings per share
(loss) will be $(0.13) to $(0.16), excluding both the amortization of
intangibles and charges for expense reduction actions. This revised guidance
compares with previously provided guidance of revenues in the range of $130 to
$140 million with net income (loss) per share, in the range of $(0.11) to
$(0.06) per share, inclusive of amortization of intangibles, or $0.00 to $0.05
per share, excluding the amortization of intangibles. Per share amounts assume
approximately 75 million shares outstanding.
Although the Company will provide detailed financial guidance for the third
quarter when second quarter earnings are announced in July, the Company now
anticipates that revenues for the third quarter 2003 will be in the range of
$105 million to $115 million. Earnings per share for the third quarter will be
dependent on product mix and the timing of impacts of actions to be undertaken
to reduce breakeven levels and will be discussed in more detail during the July
conference call.
"We are clearly disappointed with our sales levels for the first and second
quarters as we continue to endure limited visibility on customer spending
patterns," said Bob Stanzione, ARRIS President & CEO. "Because our industry is
dependent on a relatively few large customers, any disruption or change in
their spending patterns during a quarter can have a materially adverse impact
on results. In spite of a strong performance by our new DOCSIS1.1 equipment, it
appears that disruptions in customer spending primarily for first generation
telephony products late in the quarter make it necessary to revise our
guidance. Nevertheless, we are increasingly convinced that both our product and
market positions are becoming even stronger. We were pleased that throughout
the National Cable TV show this week the mood of customers was positive with
growing recognition of the market strength and value of next generation high
speed data and telephony services. Therefore, I am still optimistic about
improvements in industry spending beginning to appear in the second half of
this year. My confidence comes from the building momentum in our DOCSIS 1.1
equipment sales as it appears our Cadant C4 CMTS sales will more than double in
the second quarter. Also of note is that we continued to ship new HDTs for
first generation Cornerstone cable telephony which underlines the continuing
viability of future voiceport deployments. In addition, our new Cadant C3 now
opens additional opportunities in small to mid-size markets for data and voice
applications." Stanzione continued, "Our customers, although currently
intensely focused on cash flow and reduced spending, ultimately will need to
spur new revenue growth. The high-speed data and telephony businesses and the
bundling opportunities that they enable will drive future product sales.
However, while current economic conditions continue, we are committed to
maintaining our technological edge while at the same time reducing expenses to
produce breakeven results before amortization of intangibles."
ARRIS management will conduct a conference call at 8:30 am EDT on Friday June
13, 2003 to discuss this revision of guidance in detail. You may participate in
this conference call by dialing 800-475-2151 prior to the start of the call and
providing the ARRIS Group name and Jim Bauer as the moderator. Please note that
ARRIS will not accept any calls related to this release during the period
between the 6:30 pm EDT release on June 12th and the completion of the
scheduled conference call at 8:30 am EDT on June 13th. A replay of the
conference call can be accessed by dialing 877-519-4471 and using PIN#3998320
until end of the day on June 19, 2003.
ARRIS provides broadband local access networks with innovative next generation
high-speed data and telephony systems for the delivery of voice, video and data
to the home and business. ARRIS complete solutions enhance the reliability and
value of converged services from the network to the subscriber. Headquartered
in Duluth, Georgia, USA, ARRIS has design, engineering, distribution, service
and sales office locations throughout the world. Information about ARRIS'
products and services is 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.
Statements made in this press release, including those related to:
- second quarter 2003 revenues and earnings;
- revenues for the third quarter 2003
- the general market outlook; and
- the timing of improvements in industry conditions
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 and third quarters 2003 are
based on preliminary estimates, assumptions and projections
that management believes to be reasonable at this time, but
are beyond management's control;
- 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
- several of the substantial participants in our industry,
including some of our customers, are in a weakened financial
condition which could directly or indirectly cause a reduced
demand for our products or other unexpected consequences.
Additionally, we cannot be certain if or when the general
uncertainty in our industry will stabilize or improve.
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 expressly disclaims any obligation to update these
statements, whether as a result of new information, future events or otherwise.
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