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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
January 22, 2004
Date of Report
(Date of earliest event reported)
HARMONIC INC.
(Exact name of Registrant as specified in its charter)
| Delaware | 0-25826 | 77-0201147 | ||
| (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)
| Item 7. Financial Statements and Exhibits | ||||||||
| Item 12. Results of Operations and Financial Condition | ||||||||
| SIGNATURES | ||||||||
| Exhibit Index | ||||||||
| EXHIBIT 99.1 | ||||||||
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Item 7. Financial Statements and Exhibits
(c) Exhibits
| Exhibit Number | Description | |
| 99.1 | Press Release of Harmonic Inc., issued on January 22, 2004 |
Item 12. Results of Operations and Financial Condition
On January 22, 2004, Harmonic Inc. (“Harmonic”) is issuing a press release and holding a conference call regarding its financial results for the quarter ended December 31, 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: | January 22, 2004 | |||
| By: | /s/ROBIN N. DICKSON | |||
|
|
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| Robin N. Dickson | ||||
| Chief Financial Officer | ||||
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Exhibit Index
| Exhibit Number | Description | |
| 99.1 | Press Release of Harmonic Inc., issued on January 22, 2004 |
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Exhibit #99.1 HARMONIC ANNOUNCES FOURTH QUARTER AND YEAR END RESULTS CONTINUED REVENUE GROWTH; POSITIVE EARNINGS FOR THE QUARTER SUNNYVALE, CALIF. - JANUARY 22, 2004 - Harmonic Inc. (Nasdaq: HLIT) today announced its results for the quarter and year ended December 31, 2003. For the fourth quarter of 2003, the Company reported net sales of $56.3 million, up from $47.3 million in the previous quarter and from $39.3 million in the fourth quarter of 2002. For the full year 2003, the Company had net sales of $182.3 million, compared to $186.6 million for 2002. The sequential revenue growth for the fourth quarter reflected increased shipments to a number of domestic and international cable customers. Domestic sales represented 70% of total sales for the fourth quarter of 2003, compared to 71% in the previous quarter. The Company's CS division, which designs, manufactures and markets digital headend systems for a number of markets, had divisional net sales of $33.2 million, up from $29.0 million in the previous quarter. The BAN division, which designs, manufactures and markets fiber optic products primarily for broadband cable networks, had divisional net sales of $23.1 million, up from $18.3 million in the previous quarter. "We are pleased with our continued revenue growth and achieving profitability in the fourth quarter," said Anthony J. Ley, Chairman, President and Chief Executive Officer. "We see intensifying competition between cable and satellite operators to offer more channels of digital video and new services, such as video-on-demand and high-definition television." "In the fourth quarter, we continued to focus on expense control and on improving our operating efficiencies. Our gross margins improved significantly from a year ago, reflecting the success of our new products and increased volume. We are also very pleased with the completion of our public offering during the quarter, which strengthened our balance sheet and helps to position us for future growth. While we expect the usual seasonal slowdown in the first quarter, we are excited about our prospects in 2004 and beyond." GAAP net income for the fourth quarter of 2003 was $1.4 million, or $0.02 per share, compared to a net loss of $13.8 million, or $0.23 per share, for the same period of 2002. For the full year 2003, the GAAP net loss was $29.4 million, or $0.47 per share. The GAAP net income for the fourth quarter includes a benefit of $2.2 million from the reversal of bad debt reserves following the sale of the Company's pre-petition trade claims against Adelphia Communications. The Company also recorded a benefit of $1.4 million relating to the sale of previously reserved inventory. On a non-GAAP basis, excluding the benefits described above and the effects of non-cash accounting charges for the amortization of intangibles, the non-GAAP net income for the fourth quarter of 2003 was $1.2 million, or $0.02 per share. This compares to a non-GAAP net loss of $11.5 million, or $0.19 per share, for the same period of 2002. For the full year 2003, the non-GAAP net loss was $18.8 million, or $0.30 per share. At the end of 2003, the Company had cash, cash equivalents and short-term investments of $112.6 million, compared to $49.2 million at the end of 2002. During the fourth quarter, the Company raised net proceeds of approximately $71 million in a public offering and also generated cash from operations of approximately $8 million. Harmonic's conference call regarding its fourth quarter 2003 results will be held 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 +1-415-908-4707 (Reservation No. 21180556). The replay will be available at the same website address or by calling +1-402-977-9140 (Reservation No. 21180556).
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 views regarding intensifying competition between cable and satellite operators to offer more channels of digital video and new services such as video-on-demand, and high-definition television; our belief that our strengthened balance sheet helps to position us for future growth; and our results and prospects for the first quarter, 2004 and beyond. 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, market acceptance of new or existing Harmonic products, losses of one or more key customers, risks associated with Harmonic's international operations, inventory management problems, 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, its quarterly reports on Form 10-Q and its 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.
HARMONIC INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) DECEMBER 31, 2003 DECEMBER 31, 2002 ----------------- ----------------- (UNAUDITED) Assets Current assets: Cash and cash equivalents $ 41,877 $ 21,542 Short-term investments 70,720 27,616 Accounts receivable, net 38,528 25,380 Inventories 22,425 25,904 Prepaid expenses and other current assets 6,196 5,494 ----------- ----------- Total current assets 179,746 105,936 Property and equipment, net 23,458 32,456 Intangibles and other assets 21,522 35,362 ----------- ----------- $ 224,726 $ 173,754 =========== =========== Liabilities and stockholders' equity Current liabilities: Current portion of long-term debt $ 1,027 $ 1,862 Accounts payable 14,863 7,258 Income taxes payable 6,935 6,900 Accrued liabilities 61,532 58,670 ----------- ----------- Total current liabilities 84,357 74,690 ----------- ----------- Long-term debt, less current portion 629 710 Accrued excess facilities costs 28,627 34,754 Other non-current liabilities 4,952 1,417 ----------- ----------- Total liabilities 118,565 111,571 ----------- ----------- Stockholders' equity: Common stock 2,036,593 1,963,294 Accumulated deficit (1,930,558) (1,901,125) Accumulated other comprehensive income 126 14 ----------- ----------- Total stockholders' equity 106,161 62,183 ----------- ----------- $ 224,726 $ 173,754 =========== ===========
HARMONIC INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) THREE MONTHS ENDED YEAR ENDED ------------------ ---------- DECEMBER 31, 2003 DECEMBER 31, 2002 DECEMBER 31, 2003 DECEMBER 31, 2002 ----------------- ----------------- ----------------- ----------------- Net sales $ 56,329 $ 39,272 $ 182,276 $ 186,632 Cost of sales 33,885 29,769 121,673 132,203 --------- --------- --------- --------- Gross profit 22,444 9,503 60,603 54,429 --------- --------- --------- --------- Operating expenses: Research and development 8,962 9,178 35,107 40,829 Selling, general and administrative 10,711 12,386 48,309 81,427 Amortization of intangibles 1,933 1,933 7,732 9,522 --------- --------- --------- --------- Total operating expenses 21,606 23,497 91,148 131,778 --------- --------- --------- --------- Income/(loss) from operations 838 (13,994) (30,545) (77,349) Interest and other income, net 532 242 1,412 931 --------- --------- --------- --------- Income/(loss) before income taxes 1,370 (13,752) (29,133) (76,418) Provision for (benefit from) income taxes -- -- 300 500 --------- --------- --------- --------- Net income/(loss) $ 1,370 $ (13,752) $ (29,433) $ (76,918) ========= ========= ========= ========= Net loss per share Basic $ 0.02 $ (0.23) $ (0.47) $ (1.29) ========= ========= ========= ========= Diluted $ 0.02 $ (0.23) $ (0.47) $ (1.29) ========= ========= ========= ========= Weighted average shares Basic 67,090 60,064 62,288 59,779 ========= ========= ========= ========= Diluted 68,123 60,064 62,288 59,779 ========= ========= ========= =========
HARMONIC INC. NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1) (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) THREE MONTHS ENDED YEAR ENDED ------------------ ---------- DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 2003 2002 2003 2002 --------- --------- --------- --------- Net sales $ 56,329 $ 39,272 $ 182,276 $ 186,632 Cost of sales 33,780 29,907 118,947 129,199 --------- --------- --------- --------- Gross profit 22,549 9,365 63,329 57,433 --------- --------- --------- --------- Operating expenses: Research and development 8,962 9,178 34,587 40,829 Selling, general and administrative 12,881 11,965 48,697 55,284 --------- --------- --------- --------- Total operating expenses 21,843 21,143 83,284 96,113 --------- --------- --------- --------- Non-GAAP income/(loss) from operations 706 (11,778) (19,955) (38,680) Interest and other income, net 532 242 1,412 931 --------- --------- --------- --------- Non-GAAP income/(loss) before income taxes 1,238 (11,536) (18,543) (37,749) Provision for income taxes -- -- 300 500 --------- --------- --------- --------- Non-GAAP net income/(loss) $ 1,238 $ (11,536) $ (18,843) $ (38,249) ========= ========= ========= ========= Non-GAAP net income(loss) per share Basic $ 0.02 $ (0.19) $ (0.30) $ (0.64) ========= ========= ========= ========= Diluted $ 0.02 $ (0.19) $ (0.30) $ (0.64) ========= ========= ========= ========= Weighted average shares Basic 67,090 60,064 62,288 59,779 ========= ========= ========= ========= Diluted 68,123 60,064 62,288 59,779 ========= ========= ========= ========= (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 income/(loss) to the GAAP net income/(loss) follows below. HARMONIC INC. NON-GAAP TO GAAP INCOME (LOSS) RECONCILIATION (UNAUDITED) THREE MONTHS ENDED YEAR ENDED ------------------ ---------- (IN THOUSANDS) DECEMBER 31, 2003 DECEMBER 31, 2002 DECEMBER 31, 2003 DECEMBER 31, 2002 - -------------- ----------------- ----------------- ----------------- ----------------- Non-GAAP net income (loss) $ 1,238 $(11,536) $(18,843) $(38,249) Items charged to cost of sales: Amortization of intangibles (1,540) (1,541) (6,161) (9,126) Realized margin on reserved product sold 1,435 1,947 4,670 6,932 Provision for probable losses on Adelphia deferred cost of sales -- -- -- (201) Facilities, severance and other adjustments -- (268) (1,235) (609) -------- -------- -------- -------- Total of charges to cost of sales (105) 138 (2,726) (3,004) -------- -------- -------- -------- Items charged to operating expenses: Amortization of intangibles (1,933) (1,933) (7,732) (9,522) Loss on litigation settlement -- -- (2,670) -- Provision for probable losses on Adelphia account receivables -- -- -- (2,748) Sale of Adelphia account receivables 2,170 -- 2,170 -- Facilities, severance and other adjustments -- (421) 368 (23,395) -------- -------- -------- -------- Total of charges to operating expenses 237 (2,354) (7,864) (35,665) -------- -------- -------- -------- GAAP net income (loss) $ 1,370 $(13,752) $(29,433) $(76,918) ======== ======== ======== ========