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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001
ARRIS GROUP, INC. EMPLOYEE SAVINGS PLAN
of
ARRIS GROUP, INC.
A Delaware Corporation
IRS Employer Identification No. 58-2588724
SEC File Number 001-16631
11450 TECHNOLOGY CIRCLE
DULUTH, GA 30097
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ARRIS GROUP, INC.
EMPLOYEE SAVINGS PLAN
AS OF DECEMBER 31, 2001 AND 2000 AND YEAR ENDED DECEMBER 31, 2001
TABLE OF CONTENTS
Page
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Report of Independent Auditors 1
Financial Statements:
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to the Financial Statements 4
Supplemental Schedules:
Schedule H, Line 4(i) - Schedule of Assets (Held at End of Year) 8
Signatures 9
Exhibit 23 - Consent of Independent Auditors 10
ARRIS GROUP, INC.
EMPLOYEE SAVINGS PLAN
REPORT OF INDEPENDENT AUDITORS
The Board of Directors of ARRIS Group, Inc.
and the Trustees of the ARRIS Group, Inc.
Employee Savings Plan
We have audited the accompanying statements of net assets available for
benefits of ARRIS Group, Inc. Employee Savings Plan as of December 31, 2001 and
2000, and the related statement of changes in net assets available for benefits
for the year ended December 31, 2001. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 2001 and 2000, and changes in its net assets available for
benefits for the year ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the
financial statements taken as a whole. The accompanying supplemental schedule
of assets (held at end of year) as of December 31, 2001, is presented for the
purpose of additional analysis and is not a required part of the financial
statements but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in the audits of the financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ ERNST & YOUNG LLP
Atlanta, Georgia
June 21, 2002
1
ARRIS GROUP, INC.
EMPLOYEE SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31,
2001 2000
----------- -----------
ASSETS
Investments, at fair value $26,012,954 $26,742,735
Contributions receivable:
Participants 162,208 193,578
Employer 113,025 108,306
--------------------------------
275,233 301,884
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Total assets 26,288,187 27,044,619
LIABILITIES
Excess contributions refundable -- 318,554
--------------------------------
Net assets available for benefits $26,288,187 $26,726,065
=================================
See accompanying notes.
2
ARRIS GROUP, INC.
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2001
Additions to net assets attributed to:
Contributions:
Participants $ 4,221,998
Employer 2,478,810
------------
6,700,808
Dividends and interest 465,987
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Total additions 7,166,795
Deductions from net assets attributed to:
Net realized and unrealized depreciation in fair
value of investments (4,089,539)
Benefits paid to participants (3,504,565)
Administrative expenses (10,569)
------------
Total deductions (7,604,673)
Net decrease (437,878)
Net assets available for benefits:
Beginning of year 26,726,065
------------
End of year $ 26,288,187
============
See accompanying notes.
3
ARRIS GROUP, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
NOTE 1. DESCRIPTION OF THE PLAN
The following description of ARRIS Group, Inc. Employee Savings Plan (the
"Plan") provides only general information. Participants should refer to the
Summary Plan Description for a more complete description of the Plan's
provisions.
GENERAL
Effective January 1, 2000, the Plan was amended to allow Plan participants to
purchase and sell the common stock of ANTEC Corporation. ARRIS Group, Inc. (the
"Company" or "ARRIS") is the successor to ANTEC Corporation. During 2001, ANTEC
Corporation formed a new holding company, ARRIS Group, Inc., and acquired
Nortel Networks' interest in Arris Interactive L.L.C., which had previously
been a joint venture between ANTEC Corporation and Nortel Networks.
The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
On December 31, 1999, each current nonunion participant of the ANTEC
Corporation Pension Plan (the "Pension Plan") was required to make an
irrevocable election to either continue to accrue benefits under the Pension
Plan and maintain their then current level of matching contributions under the
Plan or to cease benefit accruals under the Pension Plan effective January 1,
2000, and become eligible to receive an increased level of matching
contributions under the Plan effective January 1, 2000. Each union participant
of the Pension Plan will continue to accrue benefits under the Pension Plan and
maintain eligibility to receive the then current level of matching
contributions under the Plan until the applicable bargaining agreement
otherwise requires.
CONTRIBUTIONS
Participants may contribute from 1% to 15% of pretax compensation, as defined
by the Plan, subject to Internal Revenue Service ("IRS") limitations. The
Company contributes an amount equal to a percent of compensation depending on
the participating subsidiary, with a maximum range of 1.5% to 6% of
compensation.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contributions,
allocations of the Company's matching contributions, allocable share of
investment earnings, and allocable share of administrative expenses not
otherwise paid by the Company. Earnings are allocated by fund based on the
ratio of a participant's account invested in a particular fund to all
participants' investments in that fund. Forfeited balances of nonvested
terminated participants' accounts are used to reduce Company contributions.
4
ARRIS GROUP, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
VESTING
Participants are immediately vested in their contributions plus actual earnings
thereon. Vesting in the Company contribution portion of participant accounts
plus actual earnings thereon is based on years of service. Participants are
fully vested after three years of credited service.
During 2001, approximately $75,817 of nonvested employer contributions were
forfeited by terminated Plan participants. These forfeitures were used to
reduce employer contributions to the Plan.
PAYMENT OF BENEFITS
Upon termination of service, retirement, death or permanent disability, a
participant may receive a lump-sum distribution equal to the nonforfeitable
portion of his/her account.
PARTICIPANT LOANS
Participants may borrow from their fund accounts a minimum of $500 up to a
maximum of the lesser of $50,000 or 50% of their vested account balances. Loan
terms range from one to five years or up to ten years for the purchase of a
primary residence. The loans are secured by the balance in the participant's
account and bear interest at the prime rate, plus 1%, in effect at the time of
the disbursement of the loan. Principal and interest are paid ratably through
payroll deductions.
ADMINISTRATIVE EXPENSES
Substantially all expenses of administering the Plan are paid by the Company.
PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contribution at any time and to terminate the
Plan, subject to the provisions of ERISA. In the event of Plan termination,
participants will become fully vested in their accounts.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The Plan's financial statements have been prepared on the accrual basis of
accounting.
5
ARRIS GROUP, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments in mutual funds and ARRIS common stock are stated at
fair value, which is based on quoted market prices on national exchanges.
Participant loans are stated at carrying value, which approximates fair value.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
NOTE 3. INVESTMENTS
The fair value of individual investments that represent 5% or more of the
Plan's net assets are as follows:
DECEMBER 31
2001 2000
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MFS Retirement Service - MFS Emerging Growth Fund $3,103,159 $3,897,631
MFS Retirement Service - MFS Bond Fund 1,561,268 993,741
MFS Retirement Service - MFS Research Fund 2,437,506 3,152,260
MFS Retirement Service - MFS Global Equity Fund 1,447,383 1,451,203
MFS Retirement Service - MFS Capital Opportunity Fund 2,763,351 3,785,469
MFS Retirement Service - Mass Invest Growth Stock
Fund 3,499,626 4,892,151
MFS Retirement Service - MFS Total Return Fund 2,749,837 2,235,662
MFS Retirement Service - MFS Fixed Fund 3,181,874 2,502,074
Vanguard 500 Index Fund 1,375,376 913,214
ARRIS Group common stock 1,410,596 824,723
6
ARRIS GROUP, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
The Plan's investments (including investments bought, sold, and held during the
year) appreciated (depreciated) in fair value as follows:
YEAR ENDED
DECEMBER 31,
2001
-----------
Mutual funds $(4,519,713)
Common stock 430,174
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$(4,089,539)
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NOTE 4. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated November 22, 1995, stating that the Plan is qualified under Section 401(a)
of the Internal Revenue Code (the "Code") and, therefore, the related trust is
exempt from taxation. The Plan has been amended since receiving the
determination letter. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The Plan administrator
believes the Plan is being operated in compliance with the applicable
requirements of the Code and, therefore, believes that the Plan, as amended, is
qualified and the related trust is tax exempt.
NOTE 5. TRANSACTIONS WITH PARTIES-IN-INTEREST
Certain Plan investments are shares of funds managed by Heritage Trust
Corporation, who is the Plan's trustee, and by MFS Retirement Services, Inc.,
who is the Plan's recordkeeper, and, therefore, these transactions qualify as
party-in-interest transactions.
The Plan held 202,201 and 143,074 shares of ARRIS Group, Inc. common stock
valued at $1,410,596 and $824,723 at December 31, 2001 and 2000, respectively.
7
ARRIS GROUP, INC.
EMPLOYEE SAVINGS PLAN
EIN: 58-2588724 PLAN NUMBER: 002
SCHEDULE H, LINE 4(I)
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2001
(C) (E)
(B) DESCRIPTION OF CURRENT
(A) IDENTITY OF ISSUE INVESTMENT VALUE
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Putnam Investments, Inc. New Opportunity Fund; 25,635 shares
$ 1,050,434
* MFS Retirement Services, Inc. MFS Emerging Growth Fund; 93,412
shares 3,103,159
Vanguard Investments Vanguard 500 Index Fund; 10,639
shares 1,375,376
* MFS Retirement Services, Inc. MFS Research Fund; 129,655 shares
2,437,506
* MFS Retirement Services, Inc. MFS Global Equity Fund; 76,866
shares 1,447,383
* MFS Retirement Services, Inc. MFS Capital Opportunity Fund;
205,773 shares 2,763,351
* MFS Retirement Services, Inc. Mass Invest Growth Stock Fund;
271,514 shares 3,499,626
Fidelity Advisors Group Gabelli Fund; 61,792 shares 661,795
* MFS Retirement Services, Inc. MFS Total Return Fund; 189,905
shares 2,749,837
* MFS Retirement Services, Inc. MFS Bond Fund; 126,010 shares 1,561,268
* MFS Retirement Services, Inc. MFS Fixed Fund; 3,182,469 shares 3,181,874
* ARRIS Group, Inc. Common stock 202,201 shares 1,410,596
Participants Loans receivable; interest rates
range 8% - 10%; maturities within
5 years 770,749
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$ 26,012,954
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* Represents a party in interest to the Plan.
Note: Cost information (column D) has not been included as all investments
are participant directed.
8
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee savings plan) have duly
caused this annual report to be signed by the undersigned thereunto duly
authorized,
ARRIS GROUP, INC.
EMPLOYEE SAVINGS PLAN
By: Administrative Committee
(Plan Administrator)
/s/ LAWRENCE A. MARGOLIS
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Lawrence A. Margolis
Executive Vice President,
Chief Financial Officer
Dated: July 1, 2002
9