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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
July 17, 2003
Date of Report
(Date of earliest event reported)
HARMONIC INC.
| Delaware | 0-25826 | 77-0201147 | ||
|
|
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| (State or other jurisdiction of incorporation or organization) |
Commission File Number | (I.R.S. Employer Identification Number) |
549 Baltic Way
Sunnyvale, CA 94089
(408) 542-2500
(Address, including zip code, and telephone number, including area code,
of Registrant’s principal executive offices)
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Item 7. Financial Statements and Exhibits
| (c) | Exhibits |
| Exhibit Number | Description | |
| 99.1 | Press Release of Harmonic Inc., issued on July 17, 2003 |
Item 9. Regulation FD Disclosure (Information Also Provided Under Item 12 – Disclosure of Results of Operations and Financial Condition)
On July 17, 2003, Harmonic Inc. (“Harmonic”) is issuing a press release and holding a conference call regarding its financial results for the quarter ended June 27, 2003. A copy of the press release is furnished as Exhibit 99.1 to this report.
Use of Non-GAAP Financial Information
To supplement our consolidated financial statements presented in accordance with GAAP, Harmonic uses non-GAAP measures of operating income/loss, net income/loss and earnings/loss per share, which are adjusted from results based on GAAP to exclude certain costs and credits and gains and losses. These non-GAAP adjustments are provided to enhance the user’s overall understanding of our current financial performance and our prospects for the future. Specifically, we believe the non-GAAP results provide useful information to both management and investors by excluding certain items that we believe are not indicative of our core operating performance. In addition, since we have historically reported non-GAAP results to the investment community, we believe the inclusion of non-GAAP numbers provides consistency in our financial reporting. Further, these non-GAAP results are a primary indicator used by management for planning and forecasting in future periods. The presentation of this additional information is not intended to be considered in isolation or as a substitute for results prepared in accordance with accounting principles generally accepted in the United States, and is not necessarily comparable to non-GAAP results published by other companies. A table reconciling the non-GAAP results to GAAP results is included in the accompanying press release.
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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.
| HARMONIC INC. | ||
| Date: | July 17, 2003 | |
| By: |
/s/ROBIN N. DICKSON
Robin N. Dickson Chief Financial Officer |
|
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Exhibit Index
| Exhibit Number | Description | |
| 99.1 | Press Release of Harmonic Inc., issued on July 17, 2003 |
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Exhibit 99.1 (HARMONIC LOGO) Press Release FOR IMMEDIATE RELEASE CONTACTS: Robin N. Dickson Michael Newman Chief Financial Officer Investor Relations Harmonic Inc. StreetConnect (408) 542-2500 (408) 542-2760 HARMONIC ANNOUNCES SECOND QUARTER RESULTS Growing Revenue and Improving Operating Efficiencies SUNNYVALE, CALIF.--JULY 17, 2003--Harmonic Inc. (Nasdaq: HLIT) today announced its results for the quarter ended June 27, 2003. For the second quarter of 2003, Harmonic reported net sales of $41.7 million, compared to $37.0 million in the previous quarter and $56.3 million in the second quarter of 2002. Domestic sales represented 73% of total sales for the second quarter of 2003. The CS division, which designs, manufactures and markets digital headend systems for a number of markets, had divisional net sales of $27.1 million, up from $24.0 million in the previous quarter. During the second quarter, the Company saw increased shipments to its cable customers, particularly sales of its NSG product for video-on-demand (VOD) services. The BAN division, which designs, manufactures and markets fiber optic products for broadband cable networks, had divisional net sales of $14.6 million, up from $13.0 million in the previous quarter. The growth in BAN sales was due to increased shipments to a number of domestic and international cable operators. "Although our customers remain generally cautious about capital commitments, we are seeing targeted expenditures in areas such as video-on-demand in cable and local channel services in the satellite market," said Anthony J. Ley, Chairman, President and Chief Executive Officer. "We are pleased with our sequential improvement in revenue and gross margin, sustained focus on expense control and continued development and introduction of exciting new products. During the second quarter, Harmonic was recognized as the "Biggest Contributor to Content Delivery" by a leading industry publication for our pioneering IP-based VOD solutions. In addition, we introduced our enhanced NMX Digital Service Manager(TM) to provide visual monitoring capabilities for our VOD platform." "While the market environment is still challenging, Harmonic's product portfolio remains strongly positioned to address the intensifying competitive pressure on our cable, satellite and telco customers to Harmonic Inc. 549 Baltic Way P.O. Box 3775 Sunnyvale, CA 94089 Tel: +1.408.542.2500 Fax: +1.408.542.2511 www.harmonicinc.com
offer a combination of digital services, including video-on-demand, high-definition video and high-speed data services. In the third quarter, we expect to see continued revenue growth." The GAAP net loss for the second quarter of 2003 was $11.7 million or $0.19 per share, compared to $11.1 million or $0.19 per share for the same period of 2002. The GAAP net loss for the second quarter of 2003 includes a non-cash charge for the amortization of intangibles of $3.5 million, a credit relating to the sale of previously reserved inventory of $1.0 million, and the litigation settlement charge of $2.7 million described in a separate press release issued today. Excluding the above charges and credit, the non-GAAP loss for the quarter was $6.6 million, or $0.11 per share, compared to a non-GAAP loss of $5.2 million, or $0.09 per share for the second quarter of 2002. The reconciliation between GAAP and non-GAAP net loss is provided in the accompanying tables. The Company will host a conference call to discuss its second quarter financial results today at 2:00 p.m. Pacific (5:00 p.m. Eastern). A listen-only broadcast of the conference call can be accessed on the Company's website at: www.harmonicinc.com or by calling +1-212-748-2800 (Reservation No. 21090932). The replay will be available at the same website address or by calling +1-402-977-9140 (Reservation No. 21090932). ABOUT HARMONIC INC. Harmonic Inc. is a leading provider of digital video, broadband optical networking and IP delivery systems to cable, satellite, telecom and broadcast network operators. Harmonic's open standards-based solutions for the headend through the last mile enable customers to develop new revenue sources and a competitive advantage by offering powerful interactive video, voice and data services such as video-on-demand, high definition digital television, telephony and Internet access. Harmonic (Nasdaq: HLIT) is headquartered in Sunnyvale, California with R&D, sales and system integration centers worldwide. The Company's customers, including many of the world's largest communications providers, deliver services in virtually every country. Visit www.harmonicinc.com for more information. This press release contains forward-looking statements within the meaning of Section 27(a) of the Securities Act of 1933 and Section 21(e) of the Securities Exchange Act of 1934, including statements related to our competitive position in the worldwide cable market, our belief that we will continue to see targeted expenditures in areas such as video-on-demand in cable and local channel services in the satellite market, our belief that our cable, satellite and telco customers will need to upgrade their networks in order to keep pace with intensifying demand for a combination of digital services, including, video-on-demand, high-definition video and high-speed data services, our expectation that we will see continued revenue growth in the third quarter, and our belief that our product portfolio remains well-positioned to capitalize on long-term opportunities across a wide range of broadband markets. Our expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include delays or decreases in capital spending in the cable and satellite industry, customer concentration and consolidation, general economic conditions, our need for additional financing, market acceptance of new or existing Harmonic products, 2
losses of one or more key customers, risks associated with Harmonic's international operations, inventory management problems, disruptions in scheduled payments of litigation settlement amounts, the effect of competition, difficulties associated with rapid technological changes in Harmonic's markets, the need to introduce new and enhanced products, and risks associated with a cyclical and unpredictable sales cycle. The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those more fully described in Harmonic's filings with the Securities and Exchange Commission including its Annual Report filed on Form 10-K for the year ended December 31, 2002 and its subsequent quarterly reports on Form 10-Q and current reports on Form 8-K. Harmonic does not undertake to update any forward-looking statements. EDITOR'S NOTE: PRODUCT AND COMPANY NAMES USED HERE ARE TRADEMARKS OR REGISTERED TRADEMARKS OF THEIR RESPECTIVE COMPANIES. 3
HARMONIC INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) JUNE 27, 2003 DECEMBER 31, 2002 ------------- ----------------- (UNAUDITED) Assets Current assets: Cash and cash equivalents $ 22,867 $ 21,542 Short-term investments 13,443 27,616 Accounts receivable, net 34,775 25,380 Inventories 21,644 25,904 Prepaid expenses and other assets 3,554 5,494 ----------- ----------- Total current assets 96,283 105,936 Property and equipment, net 27,295 32,456 Intangibles and other assets 28,378 35,362 ----------- ----------- $ 151,956 $ 173,754 =========== =========== Liabilities and stockholders' equity Current liabilities: Current portion of long-term debt $ 1,581 $ 1,862 Accounts payable 9,578 7,258 Income taxes payable 7,179 6,900 Accrued liabilities 59,336 58,670 ----------- ----------- Total current liabilities 77,674 74,690 ----------- ----------- Long-term debt, less current portion 511 710 Accrued excess facilities costs 32,407 34,754 Other non-current liabilities 1,501 1,417 ----------- ----------- Total liabilities 112,093 111,571 ----------- ----------- Stockholders' equity: Common stock 1,964,180 1,963,294 Accumulated deficit (1,924,474) (1,901,125) Accumulated other comprehensive income 157 14 ----------- ----------- Total stockholders' equity 39,863 62,183 ----------- ----------- $ 151,956 $ 173,754 =========== =========== 4
HARMONIC INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) THREE MONTHS ENDED SIX MONTHS ENDED ------------------------------------ --------------------------------- JUNE 27, 2003 JUNE 28, 2002 JUNE 27, 2003 JUNE 28, 2002 ------------- ------------- ------------- ------------- Net sales $ 41,653 $ 56,309 $ 78,694 $ 110,341 Cost of sales 28,901 37,074 55,195 75,343 --------- --------- --------- --------- Gross profit 12,752 19,235 23,499 34,998 --------- --------- --------- --------- Operating expenses: Research and development 8,431 10,795 16,934 21,914 Selling, general and administrative 14,408 17,026 26,471 32,347 Amortization of intangibles 1,933 2,828 3,866 5,656 --------- --------- --------- --------- Total operating expenses 24,772 30,649 47,271 59,917 --------- --------- --------- --------- Loss from operations (12,020) (11,414) (23,772) (24,919) Interest and other income 438 290 623 283 --------- --------- --------- --------- Loss before income taxes (11,582) (11,124) (23,149) (24,636) Provision for income taxes 100 -- 200 500 --------- --------- --------- --------- Net loss $ (11,682) $ (11,124) $ (23,349) $ (25,136) ========= ========= ========= ========= Net loss per share Basic and diluted $ (0.19) $ (0.19) $ (0.39) $ (0.42) ========= ========= ========= ========= Weighted average shares Basic and diluted 60,462 59,552 60,457 59,513 ========= ========= ========= ========= 5
HARMONIC INC. NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1) (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) THREE MONTHS ENDED SIX MONTHS ENDED ------------------------------------ ----------------------------------- JUNE 27, 2003 JUNE 28, 2002 JUNE 27, 2003 JUNE 28, 2002 ------------- ------------- ------------- ------------- Net sales $ 41,653 $ 56,309 $ 78,694 $ 110,341 Cost of sales 28,406 36,751 54,217 71,998 --------- --------- --------- --------- Gross profit 13,247 19,558 24,477 38,343 --------- --------- --------- --------- Operating expenses: Research and development 8,431 10,795 16,934 21,914 Selling, general and administrative 11,738 14,278 23,801 29,599 --------- --------- --------- --------- Total operating expenses 20,169 25,073 40,735 51,513 --------- --------- --------- --------- Loss from operations (6,922) (5,515) (16,258) (13,170) Interest and other income 438 290 623 283 --------- --------- --------- --------- Loss before income taxes (6,484) (5,225) (15,635) (12,887) Provision for income taxes 100 -- 200 500 --------- --------- --------- --------- Net loss $ (6,584) $ (5,225) $ (15,835) $ (13,387) ========= ========= ========= ========= Net loss per share Basic and diluted $ (0.11) $ (0.09) $ (0.26) $ (0.22) ========= ========= ========= ========= Weighted average shares Basic and diluted 60,462 59,552 60,457 59,513 ========= ========= ========= ========= (1) These Non-GAAP Condensed Consolidated Statements of Operations are provided to enhance overall understanding of our current financial performance and our prospects for the future. The presentation of this Non-GAAP information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP and is not necessarily comparable to Non-GAAP results published by other companies. A table reconciling the Non-GAAP net loss to the GAAP net loss follows below. HARMONIC INC. NON-GAAP TO GAAP LOSS RECONCILIATION (IN THOUSANDS) (UNAUDITED) THREE MONTHS ENDED SIX MONTHS ENDED ------------------------------- ------------------------------- JUNE 27, 2003 JUNE 28, 2002 JUNE 27, 2003 JUNE 28, 2002 ------------- ------------- ------------- ------------- Non-GAAP net loss $ (6,584) $ (5,225) $ (15,835) $ (13,387) Items charged to cost of sales: Amortization of intangibles (1,540) (3,022) (3,080) (6,044) Realized margin on reserved product sold 1,045 2,900 2,102 2,900 Provision for probable losses on Adelphia deferred cost of sales -- (201) -- (201) ------------ ----------- ------------ ----------- Total of charges to cost of sales (495) (323) (978) (3,345) ------------ ----------- ------------ ----------- Items charged to operating expenses: Amortization of intangibles (1,933) (2,828) (3,866) (5,656) Loss on litigation settlement (2,670) (2,670) Provision for probable losses on Adelphia account receivables -- (2,748) -- (2,748) ------------ ----------- ------------ ----------- Total of charges to operating expenses (4,603) (5,576) (6,536) (8,404) ------------ ----------- ------------ ----------- GAAP net loss $ (11,682) $ (11,124) $ (23,349) $ (25,136) ============ =========== ============ =========== 6