ARRIS Announces Preliminary and Unaudited First Quarter 2009 Results

SUWANEE, Ga., April 29 /PRNewswire-FirstCall/ -- ARRIS Group, Inc. (Nasdaq:
ARRS), a global technology leader in the development of advanced cable
telephony, next generation high-speed data, demand driven video solutions,
operations software and broadband access equipment, today announced
preliminary and unaudited financial results for the first quarter 2009, which
were within the revenue and earnings guidance that the Company provided on
February 11, 2009.

Revenues were $253.5 million as compared to first quarter 2008 revenues of
$273.5 million and as compared to fourth quarter 2008 revenues of $292.4
million.

Non-GAAP net income in the first quarter 2009 was $0.18 per diluted share, as
compared to the first quarter 2008 of $0.12 per diluted share and the fourth
quarter 2008 of $0.25 per diluted share.

GAAP net income in the first quarter 2009 was $0.10 per diluted share, as
compared to the first quarter 2008 net income of $0.03 per diluted share, and
as compared to the fourth quarter 2008 net loss of $(1.33) per diluted share.
The fourth quarter 2008 loss was primarily the result of a goodwill
impairment, net of a related estimated tax benefit, of $(184.6) million, or
$(1.48) per diluted share resulting from the Company's annual goodwill
impairment analysis.

Significant non-GAAP items in the first quarter 2009 include: amortization of
intangibles, equity compensation expense, non-cash interest related to
convertible debt, and a gain on the partial retirement of convertible debt. A
reconciliation of non-GAAP to GAAP earnings per share is attached to this
release and also can be found on the Company's website (www.arrisi.com).

The Company ended the first quarter 2009 with $424.4 million of cash and
short-term investments, which compares to $427.3 million at the end of 2008.
The Company generated approximately $13.8 million of cash from operating
activities in the first quarter 2009. This amount compares to cash generated
from operating activities of $30.5 million during the first quarter 2008. The
Company used $10.6 million of cash to retire $15.0 million face value
convertible debt in the first quarter 2009.

Order backlog at the end of the first quarter 2009 was $155.0 million and the
Company's book to bill ratio in the first quarter was approximately 1.16.
This amount compares to order backlog of $114.8 million and book to bill ratio
of 0.90 for the fourth quarter of 2008.

"Although macro-economic conditions caused 2009 to start off somewhat slowly,
we delivered a solid quarter with significantly higher earnings than a year
ago," said Bob Stanzione, ARRIS Chairman & CEO. "During the quarter we have
seen positive signs in our business that, coupled with the current plans of
our customers, gives me cautious optimism that our business will gain momentum
in the second quarter and beyond."

During the quarter the Company announced that Japan Cablenet Limited, the
second largest cable operator in Japan, will begin wide-scale deployment of a
160 Mbps Super High Speed Data service, called "Speed Star 160," across its
cable system footprint using both the ARRIS C4 CMTS platform and the ARRIS
DOCSIS 3.0 customer premises equipment. In addition, the Company announced
the debut of the newest member of its industry-leading CMTS portfolio, the
C4c(TM), a small-form factor DOCSIS 3.0-based CMTS chassis that uses existing
C4(R) architecture and modules and is designed for smaller operators and for
headends lacking the space or environmental capacity for a full C4(R) chassis.

"We are off to a solid start to the year, particularly in light of the overall
market conditions and I am pleased to see strengthening demand in the second
quarter," said David Potts, ARRIS EVP & CFO. "As a result, we now project
that revenues for the Company in the second quarter 2009 will be in the range
of $270 to $290 million with non-GAAP net income per diluted share in the
range of $0.20 to $0.24 and GAAP net income per diluted share, in the range of
$0.12 to $0.16."

ARRIS management will conduct a conference call at 5:00pm EDT, today,
Wednesday, April 29, 2009, to discuss these results in detail. You may
participate in this conference call by dialing 888-713-4215 or 617-213-4867
for international calls prior to the start of the call and providing the ARRIS
Group, Inc. name, conference passcode 66272751 and Jim Bauer as the moderator.
Please note that ARRIS will not accept any calls related to this earnings
release until after the conclusion of the 5:00pm EDT conference call. A
replay of the conference call can be accessed approximately two hours after
the call through Monday, May 4, 2009 by dialing 888-286-8010 or 617-801-6888
for international calls and using the passcode 62429395. A replay also will
be made available for a period of 12 months following the conference call on
ARRIS' website at www.arrisi.com.

ARRIS is a global communications technology company specializing in the
design, engineering and supply of technology supporting triple and quad-play
broadband services for residential and business customers around the world.
The Company supplies broadband operators with the tools and platforms they
need to deliver reliable telephony, demand driven video, next-generation
advertising and high-speed data services. ARRIS products expand and help grow
network capacity with access and outside plant construction equipment,
reliably deliver voice, video and data services and assure optimal service
delivery for end customers. Headquartered in Atlanta, Georgia, USA, ARRIS has
R&D centers in Atlanta; Chicago; Beaverton, Oregon; State College,
Pennsylvania; Wallingford, Connecticut; Ireland and China, and operates
support and sales offices throughout the world. Information about ARRIS
products and services can be found at http://www.arrisi.com.

Forward-looking statements:

Statements made in this press release, including those related to:

-- growth expectations for 2009;
-- second quarter and 2009 revenues and net income;
-- expected sales levels and acceptance of certain ARRIS products;
-- the general market outlook; and
-- the outlook for 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 as well as the general
outlook
for 2009 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;
-- our customers operate in a capital intensive industry, and the current
disruptions in the capital markets may adversely impact their ability
to
finance, and therefore purchase, the products that we offer; and
-- 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.

In addition to the factors set forth elsewhere in this release, other factors
that could cause results to differ from current expectations include: the
uncertain current economic climate and its impact on our customers' plans and
access to capital; 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, including its Form 10-K for the year ended December 31,
2008. 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)

March 31, December 31, September 30,
2009 2008 2008
(unaudited) (audited) (unaudited)
----------- --------- -----------

ASSETS

Current assets:
Cash and cash equivalents $398,938 $409,894 $305,987
Short-term investments, at
fair value 25,494 17,371 23,571
------ ------ ------
Total cash, cash
equivalents and
short-term investments 424,432 427,265 329,558

Restricted cash 4,550 5,673 5,768
Accounts receivable, net 155,792 159,443 180,367
Other receivables 6,636 4,749 5,180
Inventories, net 120,774 129,752 139,598
Prepaids 6,994 8,004 5,156
Current deferred income tax
assets 49,027 44,004 42,714
Other current assets 18,315 19,782 22,132
------ ------ ------
Total current assets 786,520 798,672 730,473

Property, plant and equipment,
net 59,438 59,204 60,268
Goodwill 231,684 231,684 449,418
Intangible assets, net 218,085 227,348 236,689
Investments 14,593 14,681 15,086
Noncurrent deferred income
Tax assets 3,771 12,157 3,988
Other assets 5,483 6,576 7,173
----- ----- -----
$1,319,574 $1,350,322 $1,503,095
========== ========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable $44,422 $75,863 $54,304
Accrued compensation,
benefits and related taxes 15,583 27,024 21,831
Accrued warranty 5,306 5,652 6,354
Deferred revenue 44,006 44,461 35,986
Current portion of long-term
debt 147 146 234
Current deferred income tax
liability 241 1,059 -
Other accrued liabilities 31,922 25,410 30,205
------ ------ ------
Total current liabilities 141,627 179,615 148,914
Long-term debt, net of current
portion 203,080 211,870 209,340
Accrued pension 19,289 18,820 10,622
Noncurrent income tax payable 12,441 9,607 10,128
Noncurrent deferred income tax
liability 42,530 41,598 67,403
Other long-term liabilities 14,391 15,343 18,088
------ ------ ------
Total liabilities 433,358 476,853 464,495

Stockholders' equity:
Preferred stock - - -
Common stock 1,368 1,362 1,360
Capital in excess of par
value 1,159,054 1,159,097 1,155,211
Treasury stock at cost (75,960) (75,960) (75,960)
Unrealized gain (loss) on
marketable securities (372) (274) (128)
Unfunded pension liability (8,070) (8,070) (3,358)
Accumulated deficit (189,620) (202,502) (38,341)
Cumulative translation
adjustments (184) (184) (184)
---- ---- ----
Total stockholders' equity 886,216 873,469 1,038,600
------- ------- ---------
$1,319,574 $1,350,322 $1,503,095
========== ========== ==========

June 30, March 31,
2008 2008
(unaudited) (unaudited)
----------- -----------

ASSETS

Current assets:
Cash and cash equivalents $290,266 $243,515
Short-term investments, at
fair value 7,503 49,513
----- ------
Total cash, cash
equivalents and short-term
investments 297,769 293,028

Restricted cash 7,051 7,186
Accounts receivable, net 178,178 172,719
Other receivables 9,067 6,074
Inventories, net 144,507 122,361
Prepaids 5,305 5,680
Current deferred income tax assets 47,412 51,993
Other current assets 18,916 10,952
------ ------
Total current assets 708,205 669,993

Property, plant and equipment, net 60,823 60,747
Goodwill 452,398 453,454
Intangible assets, net 244,575 257,029
Investments 9,937 10,200
Noncurrent deferred income tax assets 4,256 4,430
Other assets 9,488 10,641
----- ------
$1,489,682 $1,466,494
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable $68,476 $60,490
Accrued compensation,
benefits and related taxes 18,072 14,397
Accrued warranty 7,566 7,919
Deferred revenue 37,614 32,738
Current portion of long-term
debt 314 310
Current deferred income tax
liability - -
Other accrued liabilities 26,884 32,922
------ ------
Total current liabilities 158,926 148,776
Long-term debt, net of current
portion 206,865 204,288
Accrued pension 11,362 10,905
Noncurrent income tax payable 6,250 6,487
Noncurrent deferred income tax
liability 74,805 74,164
Other long-term liabilities 18,694 19,704
------ ------
Total liabilities 476,902 464,324

Stockholders' equity:
Preferred stock - -
Common stock 1,358 1,357
Capital in excess of par value 1,151,680 1,148,815
Treasury stock at cost (76,007) (76,007)
Unrealized gain (loss) on
marketable securities 66 151
Unfunded pension liability (3,358) (3,358)
Accumulated deficit (60,775) (68,604)
Cumulative translation
adjustments (184) (184)
---- ----
Total stockholders' equity 1,012,780 1,002,170
--------- ---------
$1,489,682 $1,466,494
========== ==========

ARRIS GROUP, INC.
PRELIMINARY CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)

For the Three Months
Ended March 31,
-------------------------
2009 2008
(unaudited) (unaudited)
----------- -----------

Net sales $253,518 $273,506
Cost of sales 158,008 188,258
------- -------
Gross margin 95,510 85,248
Gross margin % 37.7% 31.2%

Operating expenses:
Selling, general, and administrative
expenses 35,343 36,982
Research and development expenses 28,395 28,122
Restructuring 120 405
Amortization of intangible assets 9,263 13,254
----- ------
73,121 78,763
------ ------
Operating income 22,389 6,485
Other expense (income):
Interest expense 4,487 4,021
Loss on investments 297 2
Loss (gain) on foreign currency 958 (990)
Interest income (385) (2,685)
Gain on debt retirement (4,151) -
Other (income) expense, net (103) (36)
---- ---
Income from continuing
operations before income taxes 21,286 6,173
Income tax expense 8,404 2,344
----- -----
Net income $12,882 $3,829
======= ======

Net income per common share:
Basic $0.10 $0.03
===== =====
Diluted $0.10 $0.03
===== =====

Weighted average common shares:
Basic 123,281 130,763
======= =======
Diluted 124,920 131,981
======= =======

ARRIS GROUP, INC.
PRELIMINARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

For the Three Months
Ended March 31,
------------------------
2009 2008
(unaudited) (unaudited)
----------- -----------

Operating Activities:
Net income $12,882 $3,829
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 4,827 4,963
Amortization of intangible assets 9,263 13,254
Stock compensation expense 3,401 2,551
Deferred income tax provision (benefit) 4,689 (6,389)
Amortization of deferred finance fees 189 191
Provision for doubtful accounts 6 205
Loss on investments 297 2
Non-cash interest expense 2,818 2,605
Gain on debt retirement (4,152) -
Excess tax benefits from stock-based
compensation plans (431) -
Changes in operating assets & liabilities,
net of effects of acquisitions and disposals:
Accounts receivable 3,645 (5,336)
Other receivables (2,032) (1,744)
Inventory 8,978 10,245
Income taxes payable (1,123) (1,734)
Accounts payable and accrued liabilities (35,789) 9,300
Other, net 6,377 (1,427)
----- ------
Net cash provided by operating activities 13,845 30,515

Investing Activities:
Purchases of property, plant, and equipment (5,066) (6,429)
Cash paid for acquisition, net of cash
acquired (200) (4,192)
Cash proceeds from sale of property, plant
& equipment - 224
Purchases of short-term-investments (23,870) (16,887)
Disposals of short-term-investments 15,806 30,500
------ ------
Net cash provided by (used in) investing
activities (13,330) 3,216

Financing Activities:
Payment of debt and capital lease obligations (10,592) (35,097)
Repurchase of common stock - (75,960)
Excess tax benefits from stock-based
compensation plans 431 -
Employer repurchase of shares to satisfy
minimum tax withholdings (1,807) (239)
Fees and proceeds from issuance of common
stock, net 497 (2,717)
--- ------
Net cash provided by (used in)
financing activities (11,471) (114,013)

Net increase (decrease) in cash and
cash equivalents (10,956) (80,282)
Cash and cash equivalents at beginning
of period 409,894 323,797
------- -------
Cash and cash equivalents at end of period $398,938 $243,515
======== ========

ARRIS GROUP, INC.
PRELIMINARY SUPPLEMENTAL NET INCOME (LOSS) RECONCILIATION
(in thousands, except per share data)
(unaudited)

------------------- -------------------
Q1 2009 Q1 2008
------------------- -------------------
Per Diluted Per Diluted
Amount Share Amount Share
------ ----------- ------ -----------
Net income $12,882 $0.10 $3,829 $0.03

Highlighted items:
Impacting gross margin:
Stock compensation
expense 303 - 201 -

Impacting operating
expenses:
Integration costs - - 427 -
Restructuring charges 120 - 405 -
Amortization of
intangible assets 9,263 0.07 13,254 0.10
Stock compensation
expense 3,098 0.02 2,350 0.02

Impacting other (income) /
expense:
Convertible debt
non-cash interest 2,818 0.02 2,605 0.02
Gain on retirement of
debt (4,152) (0.03) - -

Impacting income tax expense:
Adjustments of income tax
valuation
allowances and research
& development credits
and other 1,455 0.01

Tax related to
highlighted items above (3,646) (0.03) (7,268) (0.06)

----- ---- ------ ----
Total highlighted items 9,259 0.07 11,974 0.09
----- ---- ------ ----
Net income excluding
highlighted items $22,141 $0.18 $15,803 $0.12
======= ===== ======= =====

Weighted average common
shares - diluted 124,920 131,981
======= =======

With respect to stock compensation expense, ARRIS records non-cash
compensation expense related to grants of options and restricted stock.
Depending upon the size, timing and the terms of the grants, this
non-cash compensation expense may vary significantly. With respect to
amortization of intangibles, the intangibles being amortized relate to
our recent acquisition of C-COR. The restructuring charge adjustments
reflect items that, although they or similar items might recur, are of a
nature and magnitude that identifying them separately provides investors
with a greater ability to project ARRIS' future performance. With
respect to the convertible debt non-cash interest, ARRIS records non-cash
interest expense related to the 2013 convertible debt as a result of the
adoption of FSP ABP 14-1 on January 1, 2009. Disclosing the non-cash
piece provides investors with the information regarding interest that
will not be paid out in cash. During the first quarter of 2009, ARRIS
repurchased a portion of their convertible debt and recognized a gain
of approximately $4.2 million. In the first quarter of 2009, a tax
expense of approximately $1.5 million was recorded for state valuation
allowances and research and development tax credits. During the first
quarter of 2008, ARRIS recorded incremental costs of $0.4 million as a
result of the C-COR integration.

In assessing operating performance and preparing budgets and forecasts,
ARRIS' management considers performance after making these adjustments
and believes that providing investors with the same information provides
greater transparency and insight into management's analysis.

ARRIS GROUP, INC.
Net Income Reconciliation (unaudited)
Q2 EPS 2009 Guidance

Estimated GAAP EPS - diluted $0.12 - $0.16
Reconciling Items:
Amortization of intangibles, after tax 0.05
Stock compensation expense, after tax 0.02
Non-cash interest expense, after tax 0.01
----
Subtotal 0.08
----
Estimated adjusted (non-GAAP) EPS - diluted $0.20 - $0.24
=============

See the Supplemental Net Income Reconciliation for a
discussion regarding management's reasoning for providing
this non-GAAP financial measure.

SOURCE ARRIS Group, Inc.

Jim Bauer, Investor Relations, ARRIS Group, Inc., +1-678-473-2647,
jim.bauer@arrisi.com