8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): October 27, 2010

ARRIS Group, Inc.

(Exact name of registrant as specified in its charter)

Delaware	000-31254	58-2588724
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

3871 Lakefield Drive, Suwanee, Georgia	30024
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: 678-473-2000

Not Applicable

Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On October 27, 2010, ARRIS Group, Inc. issued a press release regarding preliminary and unaudited financial results for the third quarter 2010 results. The press release is attached hereto as Exhibit 99.1 and is incorporated by reference.

Item 9.01. Financial Statements and Exhibits.

          99.1     Press Release dated October 27, 2010

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

ARRIS Group, Inc.
By:	/s/ David B Potts
	David B Potts
	Executive Vice President and CFO

Date: October 27, 2010

EXHIBIT INDEX

99.1 Press Release dated October 27, 2010

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE Contact: Jim Bauer
Investor Relations
(678) 473-2647
jim.bauer@arrisi.com

ARRIS ANNOUNCES PRELIMINARY AND UNAUDITED
THIRD QUARTER 2010 RESULTS

Suwanee, Ga. (October 27, 2010) ARRIS Group, Inc. (NASDAQ:ARRS), today announced preliminary and unaudited financial results for the third quarter 2010.

Revenues in the third quarter 2010 were $274.3 million, as compared to third quarter 2009 revenues of $275.8 million and compared to second quarter 2010 revenues of $280.4 million. Through the first three quarters of 2010 and 2009, revenues were $821.3 million and $807.8 million, respectively.

Adjusted net income (a non-GAAP measure) in the third quarter 2010 was $0.19 per diluted share, compared to $0.25 per diluted share for the third quarter 2009 and $0.24 per diluted share for the second quarter of 2010. Year to date, adjusted net income was $0.67 per diluted share for 2010 as compared to $0.69 per diluted share in 2009.

GAAP net income in the third quarter 2010 was $0.11 per diluted share, as compared to third quarter 2009 GAAP net income of $0.17 per diluted share and second quarter 2010 GAAP net income of $0.15 per diluted share. Year to date, GAAP net income was $0.41 per diluted share in 2010 as compared to GAAP net income of $0.45 per diluted share in 2009. Significant GAAP items that have been excluded in computing adjusted net income and adjusted net income per diluted share include amortization of intangible assets, equity compensation, non-cash interest expense, restructuring charges, and certain discrete tax items. A reconciliation of adjusted net income to GAAP net income per diluted share is attached to this release and also can be found on the Company’s website (www.arrisi.com).

Gross margin for the third quarter 2010 was 37.2%, which compares to the third quarter 2009 gross margin of 41.9% and the second quarter 2010 gross margin of 40.4%. As expected, margins declined as a result of a shift in product mix.

The Company ended the third quarter 2010 with $640.4 million of cash, cash equivalents and short-term investments, up in the aggregate by approximately $78.6 million from the end of the third quarter 2009 and down $23.0 million from the end of the second quarter 2010. The Company generated $12.5 million of cash from operating activities during the third quarter 2010 and $95.9 million through the first nine months of 2010, which compares to $63.1 million and $171.2 million during the same periods in 2009, respectively. Order backlog at

the end of the third quarter 2010 was $119.6 million as compared to $169.5 million and $174.1 million at the end of the third quarter 2009 and the second quarter 2010, respectively. The Company’s book-to-bill ratio in the third quarter 2010 was 0.80 as compared to the third quarter 2009 of 1.01 and the second quarter 2010 of 0.92.

“Third quarter financial results came in as we had forecast with CPE sales during the quarter at the highest level since 2007,” said Bob Stanzione, ARRIS Chairman & CEO. “As a result of our efforts to expand our portfolio with new IP video based products, as well as the increased demand that we anticipate for our core products, we continue to see our total addressable market growing significantly in the coming years.”

During the quarter the Company demonstrated its video, data and voice products at the IBC Show in Amsterdam. These product solutions provide European operators with a competitive technical and business case advantage based on the Company’s decades of expertise in developing IP technologies. The Company also demonstrated its video, data, fixed and wireless voice solutions to Brazilian cable operators at the ABTA Cable Exhibition in Sao Paulo, Brazil. In addition, the Company added two new customers in Korea for its CMTS platform and a major MSO customer in Germany for its universal edge QAM product.

“Of note, in the third quarter, we repurchased approximately 1.7 million shares of ARRIS common stock for $15.6 million and repurchased $14.0 million (face value) of Convertible Notes for $13.5 million. Year to date, we have repurchased 3.8 million shares and $19.0 million (face value) of Convertible Notes for an aggregate purchase price of $57.6 million. With respect to the fourth quarter 2010, we now project that revenues for the Company will be in the range of $250 to $275 million, with adjusted net income per diluted share in the range of $0.14 to $0.18 and GAAP net income per diluted share, in the range of $0.05 to $0.09.” said David Potts, ARRIS EVP & CFO.

ARRIS management will conduct a conference call at 5:00 pm EDT, today, Wednesday, October 27, 2010, to discuss these results in detail. You may participate in this conference call by dialing 888-679-8038 or 617-213-4850 for international calls prior to the start of the call and providing the ARRIS Group, Inc. name, conference pass code 59527542 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 Tuesday, November 2, 2010 by dialing 888-286-8010 or 617-801-6888 for international calls and using the pass code 69800362. A replay also will be made available for a period of 12 months following the conference call on ARRIS’ website at www.arrisi.com.

About ARRIS

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 converged IP video solutions, carrier-grade telephony, demand driven video, next-generation advertising, network and workforce management solutions, access and transport architectures and ultra high-speed data services. Headquartered in Suwanee, Georgia, USA, ARRIS has R&D centers in Suwanee, GA; Beaverton, OR; Chicago, IL; Kirkland, WA; State College, PA; Wallingford, CT; Waltham, MA; Cork, Ireland; and Shenzhen, China, and operates support and sales offices throughout the world. Information about ARRIS products and services can be found at www.arrisi.com.

Forward-looking statements:

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

• growth expectations and business prospects;

• revenues and net income for the fourth quarter 2010, full year 2010, and beyond;

• 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 fourth quarter 2010 as well as the general outlook for 2011 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;

• ARRIS’ customers operate in a capital intensive consumer based industry, and the current volatility in the capital markets or changes in customer spending may adversely impact their ability or willingness to purchase the products that the Company offers; 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-Q for the quarter ended June 30, 2010. 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)
(unaudited)

	September 30,			June 30,			March 31,			December 31,			September 30,
	2010			2010			2010			2009			2009
ASSETS
Current assets:
Cash and cash equivalents	$	351,894		$	370,932		$	500,044		$	500,565		$	461,795
Short-term investments, at fair value		288,463			292,421			161,012			125,031			99,917
Total cash, cash equivalents and short term investments		640,357			663,353			661,056			625,596			561,712
Restricted cash		4,480			4,478			4,476			4,475			4,473
Accounts receivable, net		133,915			139,673			139,207			143,708			119,125
Other receivables		2,654			6,368			3,057			6,113			2,235
Inventories, net		89,203			78,830			79,907			95,851			100,024
Prepaids		8,934			10,196			10,546			11,675			10,764
Current deferred income tax assets		28,585			30,469			37,324			35,994			32,883
Income taxes recoverable		17,094			5,943			—			3,106			2,026
Other current assets		11,253			15,386			14,328			15,790			15,167
Total current assets		936,475			954,696			949,901			942,308			848,409
Property, plant and equipment, net		56,816			56,128			56,223			57,195			58,339
Goodwill		235,109			235,122			235,256			235,388			234,416
Intangible assets, net		177,560			186,529			195,551			204,572			201,351
Investments		29,591			29,485			25,435			20,618			30,574
Noncurrent deferred income tax assets		6,560			6,127			6,298			6,759			3,593
Other assets		6,129			6,755			8,050			8,776			7,648
	$	1,448,240		$	1,474,842		$	1,476,714		$	1,475,616		$	1,384,330
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	52,011		$	72,652		$	44,523		$	53,979		$	42,659
Accrued compensation, benefits and related taxes		25,913			20,696			23,639			36,936			27,054
Accrued warranty		3,504			3,539			3,632			4,265			5,292
Deferred revenue		36,029			44,913			53,024			47,044			35,423
Current portion of long-term debt		12			50			87			124			148
Current deferred income tax liability		—			—			—			—			250
Other accrued liabilities		25,891			24,476			42,978			46,203			34,979
Total current liabilities		143,360			166,326			167,883			188,551			145,805
Long-term debt, net of current portion		204,053			212,914			214,131			211,248			208,433
Accrued pension		17,383			17,058			16,733			16,408			18,914
Noncurrent income taxes payable		16,509			16,523			16,248			14,815			10,632
Noncurrent deferred income tax liabilities		32,193			28,705			33,577			37,204			35,188
Other noncurrent liabilities		14,926			15,704			16,871			16,021			15,301
Total liabilities		428,424			457,230			465,443			484,247			434,273
Stockholders’ equity:
Preferred stock		—			—			—			—			—
Common stock		1,406			1,405			1,402			1,388			1,385
Capital in excess of par value		1,199,184			1,194,829			1,187,854			1,183,872			1,177,958
Treasury stock at cost		(115,248	)		(99,645	)		(79,019	)		(75,960	)		(75,960	)
Unrealized gain (loss) on marketable securities		(374	)		217			2			28			(60	)
Unfunded pension liability		(6,041	)		(6,041	)		(6,041	)		(6,041	)		(8,070	)
Accumulated deficit		(58,927	)		(72,969	)		(92,743	)		(111,734	)		(145,012	)
Cumulative translation adjustments		(184	)		(184	)		(184	)		(184	)		(184	)
Total stockholders’ equity		1,019,816			1,017,612			1,011,271			991,369			950,057
	$	1,448,240		$	1,474,842		$	1,476,714		$	1,475,616		$	1,384,330

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

	For the Three Months						For the Nine Months
	Ended September 30,						Ended September 30,
	2010			2009			2010			2009
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Net sales	$	274,286		$	275,772		$	821,338		$	807,811
Cost of sales		172,299			160,299			493,562			479,548
Gross margin		101,987			115,473			327,776			328,263
Operating expenses:
Selling, general, and administrative expenses		33,913			36,311			103,489			110,782
Research and development expenses		35,138			30,909			105,041			89,447
Restructuring charges		—			73			73			785
Amortization of intangible assets		8,970			9,281			27,013			27,807
		78,021			76,574			235,616			228,821
Operating income		23,966			38,899			92,160			99,442
Other expense (income):
Interest expense		4,533			4,356			13,728			13,121
Gain on investments		(369	)		(238	)		(400	)		(453	)
Loss on foreign currency		94			1,114			283			3,642
Interest income		(399	)		(424	)		(1,469	)		(1,172	)
Gain on debt retirement		(263	)		—			(378	)		(4,152	)
Other (income) expense, net		280			(263	)		107			(887	)
Income from continuing operations before income taxes		20,090			34,354			80,289			89,343
Income tax expense		6,048			12,655			27,482			31,853
Net income	$	14,042		$	21,699		$	52,807		$	57,490
Net income per common share
Basic	$	0.11		$	0.17		$	0.42		$	0.46
Diluted	$	0.11		$	0.17		$	0.41		$	0.45
Weighted average common shares:
Basic		125,237			125,326			125,927			124,381
Diluted		127,638			129,695			129,103			127,916

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

	For the Three Months						For the Nine Months
	Ended September 30,						Ended September 30,
	2010			2009			2010			2009
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Operating Activities:
Net income	$	14,042		$	21,699		$	52,807		$	57,490
Depreciation		5,837			5,408			16,893			15,370
Amortization of intangible assets		8,969			9,281			27,012			27,807
Stock compensation expense		5,785			4,260			16,058			11,714
Deferred income tax provision (benefit)		4,939			9,751			2,598			13,678
Amortization of deferred finance fees		170			180			527			548
Provision for doubtful accounts		(209	)		11			83			1
Gain on investments		(370	)		(238	)		(401	)		(453	)
Loss (gain) on disposal of fixed assets		337			(76	)		369			(46	)
Non-cash interest expense		2,781			2,772			8,548			8,308
Gain on debt retirement		(263	)		—			(378	)		(4,152	)
Excess income tax benefits from stock-based compensation plans		(36	)		(1,471	)		(2,683	)		(2,027	)
Changes in operating assets & liabilities, net of effects of acquisitions and disposals:
Accounts receivable		5,967			9,830			9,710			40,801
Other receivables		3,930			2,359			2,760			539
Inventory		(10,373	)		16,641			6,648			30,449
Income taxes payable/recoverable		(11,165	)		(4,800	)		(14,173	)		(2,868	)
Accounts payable and accrued liabilities		(22,603	)		(9,757	)		(42,226	)		(32,620	)
Other, net		4,796			(2,800	)		11,789			6,665
Net cash provided by operating activities		12,534			63,050			95,941			171,204
Investing Activities:
Purchases of property, plant, and equipment		(6,862	)		(3,459	)		(17,127	)		(14,327	)
Cash paid for acquisition, net of cash acquired		—			(7,930	)		—			(8,130	)
Cash proceeds from sale of property, plant & equipment		—			207			243			208
Purchases of investments		(100,461	)		(93,079	)		(331,547	)		(151,845	)
Disposals of investments		104,760			20,479			159,914			54,416
Net cash used in investing activities		(2,563	)		(83,782	)		(188,517	)		(119,678	)
Financing Activities:
Payment of debt obligations		(38	)		(49	)		(112	)		(121	)
Early redemption of long-term debt		(13,531	)		—			(18,331	)		(10,556	)
Repurchase of common stock		(15,603	)		—			(39,288	)		—
Excess income tax benefits from stock-based compensation plans		36			1,471			2,683			2,027
Repurchase of shares to satisfy employee tax withholdings		3			—			(6,422	)		(2,180	)
Proceeds from issuance of common stock		124			4,259			5,375			11,205
Net cash provided by (used in) financing activities		(29,009	)		5,681			(56,095	)		375
Net increase (decrease) in cash and cash equivalents		(19,038	)		(15,051	)		(148,671	)		51,901
Cash and cash equivalents at beginning of period		370,932			476,846			500,565			409,894
Cash and cash equivalents at end of period	$	351,894		$	461,795		$	351,894		$	461,795

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

	Q1 2010						Q2 2010						Q3 2010						September YTD 2010
				Per Diluted						Per Diluted						Per Diluted						Per Diluted
	Amount			Share			Amount			Share			Amount			Share			Amount			Share
Net income	$	18,991		$	0.15		$	19,774		$	0.15		$	14,042		$	0.11		$	52,807		$	0.41
Highlighted items:
Impacting gross margin:
Stock compensation expense		433			—			481			—			491			—			1,405			0.01
Impacting operating expenses:
Acquisition costs, restructuring and other		52			—			21			—			—			—			73			—
Amortization of intangible assets		9,022			0.07			9,022			0.07			8,969			0.07			27,013			0.21
Stock compensation expense		4,088			0.03			5,272			0.04			5,294			0.04			14,654			0.11
Impacting other (income) / expense:
Non-cash interest expense		2,883			0.02			2,884			0.02			2,781			0.02			8,548			0.07
Gain on retirement of debt		—			—			(115	)		—			(263	)		—			(378	)		—
Impacting income tax expense:
Adjustments of income tax valuation allowances and research & development credits and other		1,222			0.01			(351	)		—			(1,040	)		(0.01	)		(169	)		—
Tax related to highlighted items above		(5,505	)		(0.04	)		(6,170	)		(0.05	)		(6,133	)		(0.05	)		(17,808	)		(0.14	)
Total highlighted items		12,195			0.09			11,044			0.08			10,099			0.08			33,338			0.26
Net income excluding highlighted items	$	31,186		$	0.24		$	30,818		$	0.24		$	24,141		$	0.19		$	86,145		$	0.67
Weighted average common shares — diluted					129,975						130,690						127,638						129,103

	Q1 2009						Q2 2009						Q3 2009						September YTD 2009
				Per Diluted						Per Diluted						Per Diluted						Per Diluted
	Amount			Share			Amount			Share			Amount			Share			Amount			Share
Net income	$	12,882		$	0.10		$	22,909		$	0.18		$	21,699		$	0.17		$	57,490		$	0.45
Highlighted items:
Impacting gross margin:
Stock compensation expense		303			—			366			—			394			—			1,063			0.01
Impacting operating expenses:
Acquisition costs, restructuring and other		120			—			592			—			348			—			1,060			0.01
Amortization of intangible assets		9,263			0.07			9,263			0.07			9,281			0.07			27,807			0.22
Stock compensation expense		3,098			0.02			3,687			0.03			3,866			0.03			10,651			0.08
Impacting other (income) / expense:
Non-cash interest expense		2,818			0.02			2,718			0.02			2,772			0.02			8,308			0.06
Gain on retirement of debt		(4,152	)		(0.03	)		—			—			—			—			(4,152	)		(0.03	)
Impacting income tax expense:
Adjustments of income tax valuation allowances and research & development credits and other		1,455			0.01			—			—			(166	)		—			1,289			0.01
Tax related to highlighted items above		(3,646	)		(0.03	)		(5,322	)		(0.04	)		(6,218	)		(0.05	)		(15,186	)		(0.12	)
Total highlighted items		9,259			0.07			11,304			0.09			10,277			0.08			30,840			0.24
Net income excluding highlighted items	$	22,141		$	0.18		$	34,213		$	0.27		$	31,976		$	0.25		$	88,330		$	0.69
Weighted average common shares — diluted					124,920						128,054						129,695						127,916

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 acquisitions. The acquisition costs, restructuring, and other 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. In both 2010 and 2009, income tax expense adjustments were recorded for state valuation allowances and research and development tax credits. During the first quarter of 2009, and the second & third quarters of 2010, ARRIS repurchased a portion of their convertible debt and recognized a gain of approximately $4.2 million, $0.1 million and $0.3 million, respectively.

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.
PRELIMINARY SUPPLEMENTAL OPERATING INCOME RECONCILIATIONS
(unaudited)
(in thousands)

	Q1 2010			Q2 2010			Q3 2010			Sept 2010 YTD
Operating Income as reported	$	33,955		$	34,239		$	23,966		$	92,160
Operating Income as a % of sales		13	%		12	%		9	%		11	%
Highlighted Items:
Stock compensation expense		4,521			5,753			5,785			16,059
Acquisition costs, restructuring and other		52			21			—			73
Amortization of intangible assets		9,022			9,022			8,969			27,013
Operating Income excluding highlighted items		47,550			49,035			38,720			135,305
Operating Income excluding highlighted items as a % of sales		18	%		17	%		14	%		16	%

	Q1 2009			Q2 2009			Q3 2009			Sept 2009 YTD
Operating Income as reported	$	22,389		$	38,154		$	38,899		$	99,442
Operating Income as a % of sales		9	%		14	%		14	%		12	%
Highlighted Items:
Stock compensation expense		3,401			4,053			4,260			11,714
Acquisition costs, restructuring and other		120			592			348			1,060
Amortization of intangible assets		9,263			9,263			9,281			27,807
Operating Income excluding highlighted items		35,173			52,062			52,788			140,023
Operating Income excluding highlighted items as a % of sales		14	%		19	%		19	%		17	%

See the Preliminary Supplemental Net Income Reconciliation for a discussion regarding these adjustments and management’s reasoning for providing this adjusted financial measure.

ARRIS GROUP, INC.
Net Income Reconciliation (unaudited)
Q4 2010 EPS Guidance

Estimated GAAP EPS	$	0.05 - $0.09
Reconciling Items
Amortization of Intangibles (after tax)	$	0.05
Stock Compensation Expense (after tax)	$	0.03
Non-Cash Interest — Convertible Debt (after tax)	$	0.01
Subtotal	$	0.09
Estimated Adjusted (Non-GAAP) EPS	$	0.14 - $0.18

See the Preliminary Supplemental Net Income Reconciliation for a discussion regarding these adjustments and management’s reasoning for providing this adjusted financial measure.