SUWANEE, Ga., May 4, 2016 /PRNewswire/ -- ARRIS
International plc (NASDAQ: ARRS) today announced preliminary
and unaudited financial results for the first quarter 2016.
First Quarter 2016 Financial Highlights
- Revenues were $1,614.7
million
- GAAP net income (loss) was $(1.06) per diluted share
- Adjusted net income (a non-GAAP measure) was $0.47 per diluted share
- End-of-quarter cash resources were $676.2 million
- Order backlog was $1,335.1
million
- Book-to-bill ratio was 1.24
- Repurchased approximately 6.4 million shares for $150 million
"We are off to a good start to 2016. Our first quarter
came in stronger than our non-GAAP guidance and we entered the
second quarter with positive momentum. With respect to the
second quarter 2016, we expect revenues will be in the range of
$1,675 million to $1,725 million,
with adjusted net income per diluted share in the range of
$0.65 to $0.70 and GAAP net income
per diluted share in the range of $0.09 to
$0.14. We are increasingly confident that we are on
track to meet the full year targets we laid out at our recent
Investor Day," said Bob Stanzione,
ARRIS Chairman and CEO.
On January 4, 2016 the Company
completed the acquisition of Pace plc (the "Combination") and, as a
result, comparisons to prior periods are materially affected.
First quarter 2016 results include several acquisition related
items that significantly impact GAAP earnings and cash flow.
Revenues in the first quarter 2016 of $1,614.7 million were up $399.5 million, or 33%, as compared to first
quarter 2015 revenues of $1,215.2
million. First quarter revenues were also up
$513 million, or 47%, as compared to
fourth quarter 2015 revenues of $1,101.7
million.
GAAP net income (loss) in the first quarter 2016 was
$(1.06) per diluted share, which
includes the impact of various items related to the Combination: 1)
withholding tax of $55 million, 2)
restructuring costs of $51 million,
3) integration/other deal costs of $40
million, and 4) the impact of revaluing Pace's inventory
from historical cost to fair market value as required in purchase
accounting of $30 million.
First quarter 2015 GAAP net income was $0.13 per diluted share and fourth quarter 2015
GAAP net income was $0.20 per diluted
share.
Adjusted net income (a non-GAAP measure) in the first
quarter 2016 was $0.47 per diluted
share, as compared to $0.44 per
diluted share for the first quarter 2015, and the fourth quarter
2015 adjusted net income of $0.62 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).
Cash & Cash Equivalents - The Company borrowed
$800 million in the quarter to
complete the Combination using $639
million to satisfy the cash portion of the purchase price
and retiring $240 million of Pace
debt. At close, $298 million of
cash was acquired as part of the Combination. $225 million of
cash was used for operating activities during the first quarter
2016, primarily the result of reducing the acquired accounts
payable from Pace. The Company ended the first quarter 2016
with $676 million of cash resources,
while down $203 million from the end
of the fourth quarter 2015, the reduction included the repurchase
of 6.4 million ordinary shares for $150
million.
Order backlog at the end of the first quarter 2016 was
$1,335.1 million as compared to
$725.7 million and $715.8 million at the end of the first quarter
2015 and the fourth quarter 2015, respectively. The Company's
book-to-bill ratio in the first quarter 2016 was 1.24 as compared
to the first quarter 2015 of 1.08 and the fourth quarter 2015 of
1.14.
ARRIS management will conduct a conference call at 5:00 pm EDT, today, Wednesday, May 4, 2016, to discuss these results
in detail. You may participate in this conference call by dialing
888-713-4209 or 617-213-4863 for international calls prior to the
start of the call and providing the ARRIS International plc name,
conference pass code 11922388 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 11, 2016, by dialing 888-286-8010
or 617-801-6888 for international calls and using the pass code
24260601. A replay also will be made available for a period of 12
months following the conference call on ARRIS' website at
www.arris.com.
Forward-Looking Statements
Statements made in this press release, including those related
to:
- revenues and net income for the second 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 second quarter and full year 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;
- we may fail to realize the expected benefits of the recently
completed Pace acquisition and may incur significant additional
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;
- our 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 we offer;
- because the market in which we operate 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 and recently completed transactions within our
customer base, including 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: rights to intellectual property,
including related litigation; the impact of rapidly changing
technologies; 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 the Company's reports filed with the
Securities and Exchange Commission, including its Form 10-K for the
year ended December 31, 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.
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. For more
information, visit www.arris.com.
For the latest ARRIS news:
- Check out our blog: ARRIS EVERYWHERE
- Follow us on Twitter: @ARRIS
ARRIS and the ARRIS Logo are trademarks or registered trademarks
of ARRIS Enterprises, LLC. All other trademarks are the property of
their respective owners. © ARRIS Enterprises, LLC. 2016. All rights
reserved.
ARRIS
INTERNATIONAL PLC
|
|
PRELIMINARY
CONSOLIDATED BALANCE SHEETS
|
|
(in
thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
September
30,
|
|
June
30,
|
|
March
31,
|
|
|
2016
|
|
2015
|
|
2015
|
|
2015
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$659,181
|
|
$863,582
|
|
$673,346
|
|
$490,939
|
|
$499,482
|
Short-term
investments, at fair value
|
|
17,069
|
|
15,470
|
|
107,777
|
|
128,852
|
|
129,073
|
Total cash, cash
equivalents and short term investments
|
|
676,250
|
|
879,052
|
|
781,123
|
|
619,791
|
|
628,555
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable,
net
|
|
972,540
|
|
651,893
|
|
647,726
|
|
785,869
|
|
819,918
|
Other
receivables
|
|
31,868
|
|
12,233
|
|
8,684
|
|
11,268
|
|
15,054
|
Inventories,
net
|
|
662,287
|
|
401,592
|
|
367,536
|
|
389,556
|
|
372,379
|
Prepaid income
taxes
|
|
22,349
|
|
25,624
|
|
29,071
|
|
26,413
|
|
13,380
|
Prepaids
|
|
37,285
|
|
19,319
|
|
26,430
|
|
36,746
|
|
31,814
|
Current deferred
income tax assets
|
|
-
|
|
-
|
|
104,345
|
|
105,384
|
|
115,926
|
Other current
assets
|
|
123,858
|
|
120,490
|
|
148,385
|
|
102,987
|
|
73,842
|
Total current
assets
|
|
2,526,437
|
|
2,110,203
|
|
2,113,300
|
|
2,078,014
|
|
2,070,868
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
369,255
|
|
312,311
|
|
319,443
|
|
324,154
|
|
325,727
|
Goodwill
|
|
2,068,274
|
|
1,013,963
|
|
1,016,696
|
|
1,017,430
|
|
938,645
|
Intangible assets,
net
|
|
2,036,791
|
|
810,448
|
|
868,054
|
|
923,837
|
|
919,876
|
Investments
|
|
72,115
|
|
69,542
|
|
74,924
|
|
75,381
|
|
76,492
|
Noncurrent deferred
income tax assets
|
|
221,315
|
|
185,439
|
|
70,557
|
|
87,291
|
|
88,366
|
Other
assets
|
|
18,849
|
|
21,610
|
|
26,843
|
|
27,842
|
|
28,185
|
|
|
$7,313,036
|
|
$4,523,516
|
|
$4,489,817
|
|
$4,533,949
|
|
$4,448,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$818,494
|
|
$514,877
|
|
$558,371
|
|
$608,133
|
|
$594,690
|
Accrued compensation,
benefits and related taxes
|
|
97,346
|
|
111,389
|
|
97,326
|
|
78,333
|
|
75,849
|
Accrued
warranty
|
|
58,812
|
|
27,630
|
|
35,488
|
|
29,176
|
|
36,824
|
Deferred
revenue
|
|
144,603
|
|
137,606
|
|
97,490
|
|
107,632
|
|
107,230
|
Current portion of LT
debt & financing lease obligations
|
|
94,119
|
|
43,591
|
|
43,506
|
|
43,446
|
|
75,685
|
Current income taxes
liability
|
|
65,543
|
|
8,368
|
|
13,139
|
|
9,587
|
|
13,092
|
Other accrued
liabilities
|
|
248,812
|
|
169,169
|
|
168,870
|
|
155,482
|
|
167,430
|
Total current
liabilities
|
|
1,527,729
|
|
1,012,630
|
|
1,014,190
|
|
1,031,789
|
|
1,070,800
|
Long-term debt &
financing lease obligations, net of current portion
|
|
2,242,071
|
|
1,496,243
|
|
1,507,172
|
|
1,518,063
|
|
1,487,547
|
Accrued
pension
|
|
55,287
|
|
64,052
|
|
67,570
|
|
68,865
|
|
68,060
|
Noncurrent income
taxes payable
|
|
68,974
|
|
42,197
|
|
38,145
|
|
43,586
|
|
42,282
|
Noncurrent deferred
income tax liabilities
|
|
385,690
|
|
503
|
|
329
|
|
332
|
|
412
|
Other noncurrent
liabilities
|
|
126,330
|
|
66,930
|
|
71,560
|
|
92,544
|
|
90,428
|
Total
liabilities
|
|
4,406,081
|
|
2,682,555
|
|
2,698,966
|
|
2,755,179
|
|
2,759,530
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
|
|
Ordinary
shares
|
|
2,824
|
|
-
|
|
-
|
|
-
|
|
-
|
Common
stock
|
|
-
|
|
1,790
|
|
1,819
|
|
1,814
|
|
1,811
|
Capital in excess of
par value
|
|
3,204,853
|
|
1,777,276
|
|
1,762,111
|
|
1,765,804
|
|
1,745,345
|
Treasury stock at
cost
|
|
-
|
|
(331,329)
|
|
(331,329)
|
|
(331,331)
|
|
(331,331)
|
Accumulated other
comprehensive loss
|
|
(20,476)
|
|
(12,646)
|
|
(20,236)
|
|
(12,664)
|
|
(12,966)
|
Retained
earnings
|
|
(324,667)
|
|
358,823
|
|
328,782
|
|
302,525
|
|
285,768
|
Total ARRIS Group
Inc. stockholders' equity
|
|
2,862,534
|
|
1,793,914
|
|
1,741,147
|
|
1,726,150
|
|
1,688,629
|
Stockholders' equity
attributable to noncontrolling interest
|
|
44,421
|
|
47,047
|
|
49,704
|
|
52,620
|
|
-
|
Total stockholders'
equity
|
|
2,906,955
|
|
1,840,961
|
|
1,790,851
|
|
1,778,770
|
|
1,688,629
|
|
|
$7,313,036
|
|
$4,523,516
|
|
$4,489,817
|
|
$4,533,949
|
|
$4,448,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARRIS
INTERNATIONAL PLC
|
PRELIMINARY
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(in thousands,
except per share data)
|
(unaudited)
|
|
|
|
|
|
For the Three
Months
|
|
Ended March
31,
|
|
2016
|
|
2015
|
|
|
|
|
Net sales
|
$1,614,705
|
|
$1,215,158
|
Cost of
sales
|
1,230,801
|
|
878,602
|
Gross
margin
|
383,904
|
|
336,556
|
Operating
expenses:
|
|
|
|
Selling, general, and
administrative expenses
|
120,158
|
|
100,324
|
Research and
development expenses
|
161,488
|
|
132,469
|
Amortization of
intangible assets
|
98,493
|
|
57,147
|
Integration,
acquisition, and restructuring costs
|
90,919
|
|
898
|
|
471,058
|
|
290,838
|
Operating (loss)
income
|
(87,154)
|
|
45,718
|
Other expense
(income):
|
|
|
|
Interest
expense
|
19,626
|
|
13,367
|
Loss on
investments
|
1,959
|
|
1,709
|
Loss on foreign
currency
|
12,241
|
|
20
|
Interest
income
|
(783)
|
|
(721)
|
Other (income)
expense, net
|
(1,014)
|
|
7,063
|
(Loss) income before
income taxes
|
(119,183)
|
|
24,281
|
Income tax
expense
|
86,013
|
|
5,154
|
Consolidated net
(loss) income
|
(205,196)
|
|
19,127
|
Net loss attributable
to noncontrolling interests
|
(2,623)
|
|
-
|
Net (loss) income
attributable to ARRIS International plc
|
($202,573)
|
|
$19,127
|
|
|
|
|
Net (loss) income per
common share (1):
|
|
|
|
Basic
|
$
(1.06)
|
|
$
0.13
|
Diluted
|
$
(1.06)
|
|
$
0.13
|
|
|
|
|
Weighted average
common shares:
|
|
|
|
Basic
|
191,743
|
|
145,350
|
Diluted
|
191,743
|
|
148,986
|
|
|
|
|
(1)
Calculated based on net income attributable to shareowners of ARRIS
International plc
|
ARRIS
INTERNATIONAL PLC
|
PRELIMINARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
For the Three
Months
|
|
|
|
|
|
|
|
|
|
|
Ended March
31,
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Activities:
|
|
|
|
|
|
|
|
|
|
|
Consolidated net
(loss) income
|
|
|
|
|
|
$ (205,196)
|
|
$
19,126
|
|
|
|
Depreciation
|
|
|
|
|
|
23,871
|
|
19,884
|
|
|
|
Amortization of
intangible assets
|
|
|
|
|
|
99,766
|
|
57,852
|
|
|
|
Amortization of
deferred finance fees and debt discount
|
|
|
|
|
|
1,787
|
|
2,181
|
|
|
|
Deferred income tax
provision (benefit)
|
|
|
|
|
|
(36,913)
|
|
(18,189)
|
|
|
|
Stock compensation
expense
|
|
|
|
|
|
14,276
|
|
13,974
|
|
|
|
Provision for
doubtful accounts
|
|
|
|
|
|
845
|
|
267
|
|
|
|
(Gain) loss on
disposal of fixed assets
|
|
|
|
|
|
(16)
|
|
5,877
|
|
|
|
Loss on
investments
|
|
|
|
|
|
1,959
|
|
1,709
|
|
|
|
Excess tax benefits
from stock-based compensation plans
|
|
|
|
|
|
(2,354)
|
|
(16,437)
|
|
|
Changes in operating
assets & liabilities, net of effects of acquisitions and
disposals:
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
|
|
|
130,461
|
|
(221,582)
|
|
|
|
Other
receivables
|
|
|
|
|
|
13,261
|
|
(6,995)
|
|
|
|
Inventory
|
|
|
|
|
|
166,177
|
|
28,786
|
|
|
|
Income taxes
payable/recoverable
|
|
|
|
|
|
72,959
|
|
(1,409)
|
|
|
|
Accounts payable and
accrued liabilities
|
|
|
|
|
|
(535,651)
|
|
55,950
|
|
|
|
Prepaids and other,
net
|
|
|
|
|
|
29,929
|
|
(4,257)
|
|
|
|
|
Net cash used in
operating activities
|
|
|
|
|
|
(224,839)
|
|
(63,263)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities:
|
|
|
|
|
|
|
|
|
|
|
Purchases of
investments
|
|
|
|
|
|
(4,778)
|
|
(11,063)
|
|
|
Sales of
investments
|
|
|
|
|
|
2,093
|
|
10,169
|
|
|
Purchases of
property, plant & equipment, net
|
|
|
|
|
|
(9,140)
|
|
(10,919)
|
|
|
Proceeds from
sale-leaseback transaction
|
|
|
|
|
|
-
|
|
24,960
|
|
|
Acquisition, net of
cash acquired
|
|
|
|
|
|
(340,118)
|
|
-
|
|
|
Purchases of
intangible assets
|
|
|
|
|
|
(1,310)
|
|
(34,340)
|
|
|
Other, net
|
|
|
|
|
|
2,932
|
|
2,904
|
|
|
|
|
Net cash used in
investing activities
|
|
|
|
|
|
(350,321)
|
|
(18,289)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities:
|
|
|
|
|
|
|
|
|
|
|
Proceeds from
issuance of debt
|
|
|
|
|
|
800,000
|
|
-
|
|
|
Proceeds from
sale-leaseback financing transaction
|
|
|
|
|
|
-
|
|
58,729
|
|
|
Repayment of accounts
receivable financing facility
|
|
|
|
|
|
(12,042)
|
|
|
|
|
Payment of financing
lease obligation
|
|
|
|
|
|
(164)
|
|
-
|
|
|
Payment of debt
obligations
|
|
|
|
|
|
(252,625)
|
|
(13,750)
|
|
|
Repurchase of
shares
|
|
|
|
|
|
(150,003)
|
|
(24,999)
|
|
|
Excess income tax
benefits from stock-based compensation plans
|
|
|
|
|
|
2,354
|
|
16,437
|
|
|
Repurchase of shares
to satisfy employee minimum tax withholdings
|
|
|
|
|
|
(14,045)
|
|
(21,194)
|
|
|
Fees and proceeds
from issuance of shares, net
|
|
|
|
|
|
(2,716)
|
|
21
|
|
|
|
|
Net cash provided
by financing activities
|
|
|
|
|
|
370,759
|
|
15,244
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in
cash and cash equivalents
|
|
|
|
|
|
(204,401)
|
|
(66,308)
|
|
Cash and cash
equivalents at beginning of period
|
|
|
|
|
|
863,582
|
|
565,790
|
|
Cash and cash
equivalents at end of period
|
|
|
|
|
|
$ 659,181
|
|
$ 499,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARRIS
INTERNATIONAL PLC
|
PRELIMINARY
SUPPLEMENTAL SALES & NET INCOME RECONCILIATION
|
(in thousands,
except per share data) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except
per share data)
|
Q1 2015
|
|
Q4 2015
|
|
Q1 2016
|
|
|
|
|
Per
Diluted
|
|
|
|
Per
Diluted
|
|
|
|
Per
Diluted
|
|
|
Amount
|
|
Share
|
|
Amount
|
|
Share
|
|
Amount
|
|
Share
|
|
Net income (loss)
attributable to ARRIS International plc
|
$ 19,127
|
|
$
0.13
|
|
$ 30,041
|
|
0.20
|
|
$ (202,573)
|
|
$
(1.06)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Highlighted
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
Impacting gross
margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation
expense
|
1,791
|
|
0.01
|
|
2,219
|
|
0.01
|
|
2,239
|
|
0.01
|
|
Acquisition
accounting impacts related to inventory valuation
|
-
|
|
-
|
|
-
|
|
-
|
|
30,292
|
|
0.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impacting
operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Integration,
acquisition and restructuring costs
|
898
|
|
0.01
|
|
8,281
|
|
0.06
|
|
90,919
|
|
0.47
|
|
Amortization of
intangible assets
|
57,147
|
|
0.38
|
|
56,377
|
|
0.38
|
|
98,493
|
|
0.51
|
|
Stock compensation
expense
|
12,183
|
|
0.08
|
|
15,443
|
|
0.10
|
|
12,037
|
|
0.06
|
|
Noncontrolling
interest share of Non-GAAP adjustments
|
-
|
|
-
|
|
(1,357)
|
|
(0.01)
|
|
(776)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impacting other
(income) / expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Recovery on
previously impaired investment
|
-
|
|
-
|
|
(159)
|
|
-
|
|
-
|
|
-
|
|
Debt amendment
fees
|
-
|
|
-
|
|
291
|
|
-
|
|
-
|
|
-
|
|
Credit facility -
ticking fees
|
-
|
|
-
|
|
1,022
|
|
0.01
|
|
-
|
|
-
|
|
Foreign exchange
contract losses related to cash consideration of Pace
acquisition
|
-
|
|
-
|
|
13,699
|
|
0.09
|
|
1,610
|
|
0.01
|
|
Loss on sale of
building
|
5,142
|
|
0.03
|
|
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impacting income
tax expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign withholding
tax
|
-
|
|
-
|
|
-
|
|
-
|
|
54,741
|
|
0.28
|
|
Net tax
items
|
(30,533)
|
|
(0.20)
|
|
(32,363)
|
|
(0.22)
|
|
3,417
|
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total highlighted
items
|
46,628
|
|
0.31
|
|
63,453
|
|
0.42
|
|
292,972
|
|
1.51
|
|
Net income excluding
highlighted items
|
$ 65,755
|
|
$
0.44
|
|
$ 93,494
|
|
$
0.62
|
|
$ 90,399
|
|
$
0.47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares - basic
|
|
|
145,350
|
|
|
|
147,109
|
|
|
|
191,743
|
|
Weighted average
common shares - diluted
|
|
|
148,986
|
|
|
|
149,842
|
|
|
|
193,591
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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:
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 restricted stock units.
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 Accounting Impacts Related to Inventory
Valuation: In connection with the accounting related to our
acquisition, business combinations rules require the inventory be
recorded at fair value on the opening balance
sheet. This is different from historical
cost. Essentially we are required to write the inventory
up to end customer price less a reasonable margin as a
distributor. We have excluded the resulting adjustments in
inventory and cost of goods sold.
Integration, Acquisition and Restructuring 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 (loss) measures. We
incurred expenses in connection with the ActiveVideo and the Pace
acquisition, 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 consists of
employee severance and abandoned facilities. 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.
Noncontrolling Interest share of Non-GAAP Adjustments: The
joint venture formed with Charter for the acquisition of
ActiveVideo 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 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).
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.
We have excluded the effect of the associated fees in
calculating our non-GAAP financial measures. We believe it is
useful to understand the effect of this item in our other expense
(income).
Credit Facility - Ticking Fees: In connection with our
acquisition of Pace, 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 item in 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.
Foreign Withholding Tax: In connection with our
acquisition of Pace, ARRIS US Holdings, Inc. transferred shares of
its subsidiary ARRIS Financing II Sarl to ARRIS International
plc. Under U.S. tax law, based on the best available
information, we believe the transfer constituted a deemed
distribution from ARRIS U.S. Holdings Inc. to ARRIS International
plc that is treated as a dividend for U.S. tax purposes. A
deemed dividend of this type is subject to U.S. withholding
tax to the extent of the current and accumulated earnings and
profits (as computed for tax purposes) ("E&P") of ARRIS U.S.
Holdings Inc., which include the E&P of the former ARRIS Group,
Inc. and subsidiaries through December
31, 2016. Accordingly, ARRIS U.S. Holdings Inc.
remitted U.S. withholding tax in the amount of $55 million based upon its estimated E&P of
$1.1 billion and the U.S. dividend
withholding tax rate of 5 percent (as provided in Article 10
(Dividends) of the United Kingdom-United States Tax Treaty).
We have excluded the withholding tax in calculating our non-GAAP
financial measures.
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-2016-results-300262965.html
SOURCE ARRIS