Arris Posts Q3

SUWANEE, Ga. -- ARRIS Group, Inc. (Nasdaq: ARRS - News), 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 third quarter 2009.

Revenues in the third quarter 2009 were $275.8 million, compared to second quarter 2009 revenues of $278.5 million and third quarter 2008 revenues of $297.6 million. Through the first nine months of 2009 and 2008, revenues were $807.8 million and $852.2 million, respectively. Adjusted net income (a non-GAAP measure) for the third quarter 2009 was $0.25 per diluted share, compared to $0.27 per diluted share for the second quarter 2009 and $0.24 per diluted share for the third quarter of 2008. Year to date, adjusted net income was $0.69 per diluted share for 2009 as compared to $0.52 per diluted share in 2008. The increased profitability primarily reflects higher gross margins.

GAAP net income for the third quarter 2009 was $0.17 per diluted share, as compared to the second quarter 2009 of $0.18 per diluted share, and the third quarter 2008 of $0.18 per diluted share. Year to date, GAAP net income was $0.45 per diluted share for 2009 as compared to $0.27 per diluted share for 2008. Significant GAAP items in the third quarter 2009 that have been excluded in computing adjusted net income and earnings per shares include: amortization of intangibles, equity compensation expense, restructuring and acquisition-related costs, and non-cash interest related to convertible debt. A reconciliation of adjusted net income to GAAP net income per share is attached to this release and also can be found on the Company's website (www.arrisi.com).

Gross margin in the third quarter 2009 was 41.9%, which compares to the second quarter 2009 of 42.1% and the third quarter 2008 of 35.7%. The year-over-year improvement primarily reflects continued strong CMTS sales.

The Company ended the third quarter 2009 with $577 million of cash resources, which includes $562 million of cash and short-term investments, and $15 million of long-term marketable security investments, up in the aggregate by approximately $53 million from the end of the second quarter 2009 as a result of both strong earnings and lower working capital. The Company generated $63 million of cash from operating activities in the third quarter 2009 and $171 million through the first nine months of 2009, which compares to $46 million and $87 million in the same periods in 2008. Order backlog at the end of the third quarter 2009 was $170 million and the Company's book to bill ratio in the third quarter was 1.01. These amounts compare to order backlog of $166 million and book to bill ratio of 1.04 in the second quarter of 2009.

"The ARRIS team continues to deliver products and services that our customers worldwide need in order to grow, meet the competition and enhance the subscriber experience," said Bob Stanzione, ARRIS Chairman & CEO. "Rapid increases in internet TV traffic are altering the home video experience and creating demand for the ARRIS high speed data platform. We have taken key steps to grow our current business to include a strong video product suite in order to capitalize on today's vision of a converged voice, data and video platform."

During the quarter the Company announced the purchase of substantially all of the assets of Digeo, Inc., which provides products and a rich patent portfolio for video networking and multi-media services platforms as well the purchase of EGT, Inc. which provides video processing technologies that complement the Company's VOD, ad insertion and switched digital video product offerings. Also during the quarter, the Company announced that two new customers, Bresnan Communications and Kabel Nord, had selected the market leading ARRIS C-4 CMTS product for deployment in their operation areas. International sales represent a growing portion of ARRIS revenues with Cablevision Mexico the third largest customer in the quarter and three Japanese and Canadian customers ranked in the top twenty customers.

"Our third quarter 2009 results reflect continuing strong market acceptance of ARRIS products," said David Potts, ARRIS EVP & CFO. "Once again, our strong gross margins and cash generation demonstrate the financial strength of our Company. With respect to the fourth quarter 2009, we project that revenues for the Company will be in the range of $265 to $285 million, with adjusted net income per diluted share in the range of $0.22 to $0.26 and GAAP net income per diluted share, in the range of $0.13 to $0.17."

ARRIS management will conduct a conference call at 5:00 pm EDT, today, Monday, October 26, 2009, to discuss these results in detail. You may participate in this conference call by dialing 888-679-8033 or 617-213-4846 for international calls prior to the start of the call and providing the ARRIS Group, Inc. name, conference passcode 82209148 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 Friday, October 30, 2009 by dialing 888-286-8010 or 617-801-6888 for international calls and using the passcode 23090362. 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 Group Inc. (Nasdaq: ARRS)