e8vk
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)
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 Registrants principal executive offices)
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 (see General Instruction A.2. below):
|
|
|
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)) |
TABLE OF CONTENTS
Item 2.02. Results of Operations and Financial Condition.
On October 25, 2006, Harmonic Inc. (Harmonic) issued a press release regarding its unaudited
financial results for the quarter ended September 29, 2006. In the press release, Harmonic also
announced that it would be holding a conference call on Wednesday, October 25, 2006, to discuss its
financial results for the quarter ended September 29, 2006. A copy of the press release is attached
as Exhibit 99.1 hereto, and the information in Exhibit 99.1 is incorporated herein by reference.
The information in this Current Report on Form 8-K and the exhibit attached hereto is being
furnished and shall not be deemed filed for the purposes of Section 18 of the Securities Exchange
Act of 1934, as amended, (the Exchange Act) or otherwise subject to the liabilities of that
Section, and this Current Report on Form 8-K and the exhibit attached hereto shall not be
incorporated by reference into any filing by Harmonic under the Securities Act of 1933, as amended,
or under the Exchange Act.
Use of Non-GAAP Financial Information
In establishing operating budgets, managing its business performance, and setting internal
measurement targets, the Company excludes a number of items required by GAAP. Management believes
that these accounting charges and credits, which typically are non-cash in nature or affect the
period-to-period comparability of results, are not useful in managing its operations and business.
Historically, the Company has publicly presented supplemental non-GAAP measures in order to assist
the investment community to see the Company through the eyes of management, and thereby enhance
understanding of its operating performance. The non-GAAP measures used by management are operating
expenses, net income (loss) and net income (loss) per share. The presentation of non-GAAP
information is subject to material limitations, 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 reconciliation of non-GAAP measures to GAAP is
included with the financial statements contained in the press release attached hereto as Exhibit
99.1.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits.
|
|
|
Exhibit |
|
|
Number |
|
Description |
99.1
|
|
Press Release of Harmonic Inc., issued on October 25, 2006 |
2
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: October 25, 2006
|
|
|
By: |
/s/ Robin N. Dickson
|
|
|
|
Robin N. Dickson |
|
|
|
Chief Financial Officer |
|
|
3
Exhibit Index
|
|
|
Exhibit |
|
|
Number |
|
Description |
99.1
|
|
Press Release of Harmonic Inc., issued on October 25, 2006 |
exv99w1
Exhibit 99.1
Harmonic Announces Third Quarter Results
Strong Sequential Sales Growth; Profitability;
Many New Customer Wins and Product Introductions
SUNNYVALE, Calif.October 25, 2006Harmonic Inc. (Nasdaq: HLIT), a leading provider of digital
video, broadband optical networking and IP delivery systems, today announced its results for the
quarter ended September 29, 2006.
For the third quarter of 2006, the Company reported net sales of $62.9 million, up from $53.3
million in the previous quarter and up from $61.0 million in the third quarter of 2005. The 18%
sequential sales growth reflected increased shipments of a broad range of new video delivery
solutions to domestic cable customers and new international telco and satellite customers. During
the quarter, supply chain constraints continued to have some impact on the timing of shipments. The
Company expects these supply issues to be resolved in the fourth quarter.
The Company continued to expand its customer base worldwide. International sales represented 53% of
net sales for the third quarter of 2006, compared to 49% for the previous quarter and 44% in the
third quarter of 2005.
During the third quarter of 2006, the Company continued to improve its gross margins. This
improvement was due to an increase in the proportion of net sales from video processing and
software and services, more favorable gross margins from new products and a margin benefit
associated with favorable progress on a major project.
The GAAP net income for the third quarter of 2006 was $4.0 million, or $0.05 per diluted share,
compared to a GAAP net loss of $2.9 million, or $0.04 per share for the same period of 2005. The
GAAP net income for the third quarter of 2006 included a net $2.1 million restructuring charge for
excess facilities which were vacated during the third quarter in connection with a plan to make
more efficient use of the Companys buildings, offset by credits to the excess facilities reserve
as a result of entry into sub-leases for vacated buildings. The GAAP net income also included a
non-cash charge of $1.2 million for stock-based compensation expense. GAAP results presented for
2005 do not include stock-based compensation expense. Excluding these accounting charges for excess
facilities, stock-based compensation expense and the amortization of intangibles, the non-GAAP net
income for the third quarter of 2006 was $7.5 million, or $0.10 per diluted share, compared to a
non-GAAP net loss, excluding the amortization of intangibles, of $2.6 million, or $0.04 per share
for the same period of 2005.
As of September 29, 2006, the Company had cash, cash equivalents and short-term investments of
$110.7 million, down slightly from $113.5 million as of June 30, 2006 and $110.8 million as of
December 31, 2005.
We are very pleased with our sales growth, improved operating efficiencies and profitability,
said Patrick Harshman, President and Chief Executive Officer. We continued to see strong bookings
across our global customer base. The quarter saw stronger U.S. cable activity, with growing demand
for our video processing, video-on-demand edge and optical access solutions. We also continued to
win new international business in the IPTV and satellite markets, driven by our next-generation
encoders and video processing solutions, with new customer announcements in Austria, Germany,
Norway, Romania and Spain.
We have made significant progress in streamlining our operations and realigning our resources in
order to strengthen our technology leadership. We have successfully introduced extensions to our
family of MPEG-4 AVC encoders and video stream processing solutions for both high-definition and
standard definition, as well as new high performance transmitters and receivers to extend cable
network bandwidth in preparation for more video-on-demand and other narrowcast services. We also
announced a definitive agreement to acquire Entone Technologies, whose video networking software
solutions for content ingest, distributed content management and video streaming will significantly
add to our on-demand capabilities. We currently expect this transaction to close in November.
As we move into the fourth quarter, we expect to resolve the supply constraints that have held us
back this year. We are very encouraged by customer demand for our exciting new products and the
improvements in our operating
performance. Our deep customer relationships, outstanding technologies and a solid balance sheet
strategically position us to capitalize on the emerging opportunities in video delivery.
Business Outlook
The Company anticipates net sales for the fourth quarter of the year to be in a range of $67 to $72
million. Gross margins in the fourth quarter are expected to be lower than reported in the third
quarter, in a range of 43% to 46%.
Conference Call Information
Harmonic will host a conference call today to discuss its financial results at 2:00 p.m. Pacific
(5:00 p.m. Eastern). A listen-only broadcast of the conference call can be accessed on the
Companys website at www.harmonicinc.com or by calling +1.617.597.5363 (participant code 17518057).
The replay will be available after 5:00 p.m. Pacific at the same website address or by calling
+1617.801.6888 (participant code 67913915).
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. Harmonics 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 Companys customers, including many of the worlds largest
communications providers, deliver services in virtually every country. For more information, visit
www.harmonicinc.com.
Legal Notice Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements
related to our expectation to resolve supply chain constraints; our expectations regarding demand
for video-on-demand and other narrowcast services; our beliefs regarding momentum in our business
as we move into the fourth quarter of 2006; our expectation that we will experience revenue growth
in the fourth quarter of 2006 from the third quarter; our plans and expectations regarding further
cost reductions and improvements in operating efficiencies, including our plan to make more
efficient use of our facilities; our expectation that we will experience reductions in occupancy
expenses; our belief that continuing improvements in our operating performance coupled with our
deep customer relationships, outstanding technologies and a solid balance sheet strategically
position us to capitalize on the emerging opportunities in video delivery; and our expectations
regarding our sales for the fourth quarter of 2006 and gross margins for the fourth quarter. 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 continued unresolved supply chain constraints,
difficulties in executing on our plan to improve our operating efficiencies, delays or decreases in
capital spending in the cable, satellite and telco industries, 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 Harmonics international operations,
inventory management, the effect of competition, difficulties associated with rapid
technological changes in Harmonics 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 Harmonics filings with the Securities and Exchange Commission, including
our Annual Report filed on Form 10-K and Form 10-K/A for the year ended December 31, 2005, our
Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, and our current reports on Form
8-K. Harmonic does not undertake to update any forward-looking statements.
Editors Note: Product and company names used here are trademarks or registered trademarks of their
respective companies.
Harmonic Inc.
Condensed Consolidated Balance Sheets
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
September 29, 2006 |
|
|
December 31, 2005 |
|
|
|
(Unaudited) |
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
50,404 |
|
|
$ |
37,818 |
|
Short-term investments |
|
|
60,320 |
|
|
|
73,010 |
|
Accounts receivable, net |
|
|
52,423 |
|
|
|
43,433 |
|
Inventories |
|
|
35,635 |
|
|
|
38,552 |
|
Prepaid expenses and other current assets |
|
|
16,104 |
|
|
|
8,335 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
214,886 |
|
|
|
201,148 |
|
Property and equipment, net |
|
|
14,943 |
|
|
|
17,040 |
|
|
|
|
|
|
|
|
|
|
Intangibles and other assets |
|
|
7,238 |
|
|
|
8,109 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
237,067 |
|
|
$ |
226,297 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Current portion of long-term debt |
|
$ |
596 |
|
|
$ |
812 |
|
Accounts payable |
|
|
22,864 |
|
|
|
19,378 |
|
Income taxes payable |
|
|
6,952 |
|
|
|
6,480 |
|
Deferred revenue |
|
|
23,019 |
|
|
|
18,932 |
|
Accrued liabilities |
|
|
40,990 |
|
|
|
37,438 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
94,421 |
|
|
|
83,040 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, less current portion |
|
|
61 |
|
|
|
460 |
|
Accrued excess facilities costs |
|
|
17,889 |
|
|
|
18,357 |
|
Other non-current liabilities |
|
|
7,020 |
|
|
|
11,458 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
119,391 |
|
|
|
113,315 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity: |
|
|
|
|
|
|
|
|
Common stock |
|
|
2,056,594 |
|
|
|
2,048,164 |
|
Accumulated deficit |
|
|
(1,938,750 |
) |
|
|
(1,934,715 |
) |
Accumulated other comprehensive loss |
|
|
(168 |
) |
|
|
(467 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity |
|
|
117,676 |
|
|
|
112,982 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
237,067 |
|
|
$ |
226,297 |
|
|
|
|
|
|
|
|
Harmonic Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 29, 2006 |
|
|
September 30, 2005 |
|
|
September 29, 2006 |
|
|
September 30, 2005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
62,856 |
|
|
$ |
60,960 |
|
|
$ |
172,346 |
|
|
$ |
193,638 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
33,059 |
|
|
|
39,564 |
|
|
|
101,064 |
|
|
|
121,797 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
29,797 |
|
|
|
21,396 |
|
|
|
71,282 |
|
|
|
71,841 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
10,021 |
|
|
|
9,403 |
|
|
|
29,554 |
|
|
|
28,381 |
|
Selling, general and administrative |
|
|
16,931 |
|
|
|
15,166 |
|
|
|
48,623 |
|
|
|
47,102 |
|
Amortization of intangibles |
|
|
45 |
|
|
|
110 |
|
|
|
179 |
|
|
|
1,233 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
26,997 |
|
|
|
24,679 |
|
|
|
78,356 |
|
|
|
76,716 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
|
|
2,800 |
|
|
|
(3,283 |
) |
|
|
(7,074 |
) |
|
|
(4,875 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income, net |
|
|
1,319 |
|
|
|
381 |
|
|
|
3,522 |
|
|
|
1,185 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
4,119 |
|
|
|
(2,902 |
) |
|
|
(3,552 |
) |
|
|
(3,690 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (benefit from) income taxes |
|
|
103 |
|
|
|
(11 |
) |
|
|
482 |
|
|
|
25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
4,016 |
|
|
$ |
(2,891 |
) |
|
$ |
(4,034 |
) |
|
$ |
(3,715 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.05 |
|
|
$ |
(0.04 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.05 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
$ |
0.05 |
|
|
$ |
(0.04 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.05 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used to compute net income (loss)
per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
74,588 |
|
|
|
73,554 |
|
|
|
74,286 |
|
|
|
73,168 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
75,050 |
|
|
|
73,554 |
|
|
|
74,286 |
|
|
|
73,168 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harmonic Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
September 29, 2006 |
|
|
September 30, 2005 |
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(4,034 |
) |
|
$ |
(3,715 |
) |
Adjustments to reconcile net loss to cash used in operating activities: |
|
|
|
|
|
|
|
|
Amortization of intangibles |
|
|
672 |
|
|
|
2,311 |
|
Depreciation |
|
|
5,719 |
|
|
|
6,278 |
|
Stock-based compensation |
|
|
4,376 |
|
|
|
9 |
|
Loss on disposal of fixed assets |
|
|
55 |
|
|
|
15 |
|
Deferred income taxes |
|
|
|
|
|
|
(282 |
) |
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(9,314 |
) |
|
|
16,774 |
|
Inventories |
|
|
2,877 |
|
|
|
22 |
|
Prepaid expenses and other assets |
|
|
(8,133 |
) |
|
|
2,275 |
|
Accounts payable |
|
|
3,486 |
|
|
|
(2,727 |
) |
Deferred revenue |
|
|
2,474 |
|
|
|
4,774 |
|
Income taxes payable |
|
|
366 |
|
|
|
(706 |
) |
Accrued excess facilities costs |
|
|
683 |
|
|
|
(3,530 |
) |
Accrued and other liabilities |
|
|
764 |
|
|
|
(12,475 |
) |
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
|
|
(9 |
) |
|
|
9,023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Purchases of investments |
|
|
(58,061 |
) |
|
|
(47,202 |
) |
Proceeds from sale of investments |
|
|
71,030 |
|
|
|
49,053 |
|
Acquisition of property and equipment, net |
|
|
(3,677 |
) |
|
|
(4,232 |
) |
Acquisition of BTL, net of cash acquired |
|
|
|
|
|
|
(5,955 |
) |
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities |
|
|
9,292 |
|
|
|
(8,336 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Repayments under bank line and term loan |
|
|
(615 |
) |
|
|
(829 |
) |
Repayments of capital lease obligations |
|
|
(61 |
) |
|
|
(72 |
) |
Proceeds from issuance of common stock, net |
|
|
4,017 |
|
|
|
6,281 |
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
3,341 |
|
|
|
5,380 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
(38 |
) |
|
|
134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
|
12,586 |
|
|
|
6,201 |
|
Cash and cash equivalents at beginning of period |
|
|
37,818 |
|
|
|
26,603 |
|
Cash and cash equivalents at end of period |
|
$ |
50,404 |
|
|
$ |
32,804 |
|
|
|
|
|
|
|
|
Use of Non-GAAP Financial Measures
In establishing operating budgets, managing its business performance, and setting internal
measurement targets, the Company excludes a number of items required by GAAP. Management believes
that these accounting charges and credits, which typically are non-cash in nature or affect the
period-to-period comparability of results, are not useful in managing its operations and business.
Historically, the Company has publicly presented supplemental non-GAAP measures in order to assist
the investment community to see the Company through the eyes of management, and thereby enhance
understanding of its operating performance. The non-GAAP measures used by management are gross
margins, operating expenses, net income (loss) and net income (loss) per share. The presentation of
non-GAAP information is subject to material limitations, 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 reconciliation of non-GAAP measures
to GAAP is included with the financial statements contained in this press release. These
adjustments for the periods presented, and the basis for excluding them, are:
|
|
Restructuring Activities |
|
|
|
Severance Costs and Excess Facilities Charges |
|
|
|
|
The Company has incurred severance costs in cost of sales and in operating expenses due to a
recent reorganization of its senior management following the appointment of its new
President and Chief Executive Officer in May. The Company has also incurred charges relating
to the costs of excess facilities which were vacated during the third quarter as part of a
plan to make more efficient use of space on its Sunnyvale campus. These charges were
partially offset by credits to existing excess facilities reserves as a result of the
Company entering into sub-leases for vacant buildings. The Company excludes costs of this
nature in evaluating its ongoing operational performance as they affect the comparability of
results. We believe that these costs do not reflect expected future operating expenses nor
do they provide a meaningful comparison of current versus prior operating results. |
|
|
|
Stock-Based Compensation Expense |
|
|
|
|
Harmonic has incurred stock-based compensation expense as required under FAS 123R for fiscal
year 2006 and under APB 25 for prior comparative periods. The Company excludes stock-based
compensation expense because it believes that this measure is not relevant in planning and
managing its operations. Furthermore, because of varying available valuation methodologies,
subjective assumptions and the variety of stock-based compensation arrangements, we believe
that the exclusion of stock-based compensation expense allows for more accurate comparisons
to competitors and peer group companies. |
|
|
|
|
Amortization of Intangibles |
|
|
|
|
The Company has incurred amortization of intangibles, included in gross margins and
operating expenses in its GAAP financial statements, related to acquisitions the Company has
made. Management excludes these items when it evaluates its operating performance. The
Company believes that eliminating this expense from its non-GAAP measures is useful to
investors as a measurement when comparing historical and prospective results and comparing
such results to competitors and peer group companies because it more clearly describes the
Companys operating performance, since the amortization of intangibles will vary if and when
the Company makes additional acquisitions. |
Harmonic Inc.
GAAP to Non-GAAP Income (Loss) Reconciliation
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 29, 2006 |
|
|
Three Months Ended September 30, 2005 |
|
(In thousands) |
|
Gross Margin |
|
|
Operating Expense |
|
|
Net Income (Loss) |
|
|
Gross Margin |
|
|
Operating Expense |
|
|
Net Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP |
|
$ |
29,797 |
|
|
$ |
26,997 |
|
|
$ |
4,016 |
|
|
$ |
21,396 |
|
|
$ |
24,679 |
|
|
$ |
(2,891 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales related to stock based compensation expense |
|
|
184 |
|
|
|
|
|
|
|
184 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expense related to stock based
compensation expense |
|
|
|
|
|
|
(331 |
) |
|
|
331 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expense related to excess
facilities costs |
|
|
|
|
|
|
(2,058 |
) |
|
|
2,058 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expense related to stock
based compensation expense |
|
|
|
|
|
|
(729 |
) |
|
|
729 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangibles from acquisitions |
|
|
169 |
|
|
|
(45 |
) |
|
|
214 |
|
|
|
154 |
|
|
|
(110 |
) |
|
|
264 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP |
|
$ |
30,150 |
|
|
$ |
23,834 |
|
|
$ |
7,532 |
|
|
$ |
21,550 |
|
|
$ |
24,569 |
|
|
$ |
(2,627 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP income (loss) per share basic and diluted |
|
|
|
|
|
|
|
|
|
$ |
0.05 |
|
|
|
|
|
|
|
|
|
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP income (loss) per share basic and diluted |
|
|
|
|
|
|
|
|
|
$ |
0.10 |
|
|
|
|
|
|
|
|
|
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per-share calculation basic |
|
|
|
|
|
|
|
|
|
|
74,588 |
|
|
|
|
|
|
|
|
|
|
|
73,554 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per-share calculation diluted |
|
|
|
|
|
|
|
|
|
|
75,050 |
|
|
|
|
|
|
|
|
|
|
|
73,554 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 29, 2006 |
|
|
Nine Months Ended September 30, 2005 |
|
|
|
Gross Margin |
|
|
Operating Expense |
|
|
Net Income (Loss) |
|
|
Gross Margin |
|
|
Operating Expense |
|
|
Net Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP |
|
$ |
71,282 |
|
|
$ |
78,356 |
|
|
$ |
(4,034 |
) |
|
$ |
71,841 |
|
|
$ |
76,716 |
|
|
$ |
(3,715 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales related to severance costs |
|
|
300 |
|
|
|
|
|
|
|
300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales related to stock based compensation expense |
|
|
727 |
|
|
|
|
|
|
|
727 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expense related to severance costs |
|
|
|
|
|
|
(12 |
) |
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expense related to stock based
compensation expense |
|
|
|
|
|
|
(1,304 |
) |
|
|
1,304 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expense related to
severance costs |
|
|
|
|
|
|
(650 |
) |
|
|
650 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expense related to stock
based compensation expense |
|
|
|
|
|
|
(2,342 |
) |
|
|
2,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expense related to excess
facilities expense |
|
|
|
|
|
|
(2,058 |
) |
|
|
2,058 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangibles from acquisitions |
|
|
493 |
|
|
|
(179 |
) |
|
|
672 |
|
|
|
1,096 |
|
|
|
(1,233 |
) |
|
|
2,329 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP |
|
$ |
72,802 |
|
|
$ |
71,811 |
|
|
$ |
4,031 |
|
|
$ |
72,937 |
|
|
$ |
75,483 |
|
|
$ |
(1,386 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP (loss) per share basic and diluted |
|
|
|
|
|
|
|
|
|
$ |
(0.05 |
) |
|
|
|
|
|
|
|
|
|
$ |
(0.05 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP (loss) income per share basic and diluted |
|
|
|
|
|
|
|
|
|
$ |
0.05 |
|
|
|
|
|
|
|
|
|
|
$ |
(0.02 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per-share calculation GAAP basic and diluted; Non-GAAP basic |
|
|
|
|
|
|
|
|
|
|
74,286 |
|
|
|
|
|
|
|
|
|
|
|
73,168 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per-share calculation Non-GAAP diluted |
|
|
|
|
|
|
|
|
|
|
74,726 |
|
|
|
|
|
|
|
|
|
|
|
73,168 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
____________