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
July 25, 2007
Date of Report
(Date of earliest event reported)
HARMONIC INC.
(Exact name of Registrant as specified in its charter)
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Delaware
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000-25826
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77-0201147 |
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(State or other jurisdiction of
incorporation or organization)
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Commission File Number
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(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 July 25, 2007, Harmonic Inc. (Harmonic) issued a press release regarding its unaudited
financial results for the quarter ended June 29, 2007. In the press release, Harmonic also
announced that it would be holding a conference call on Wednesday, July 25, 2007, to discuss its
financial results for the quarter ended June 29, 2007. A copy of
the press release is furnished 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 furnished
herewith 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, Harmonic excludes a number of items required by GAAP. Management believes
that these accounting charges and credits, most of which are non-cash or non-recurring in nature,
are not useful in managing its operations and business. Historically, Harmonic has also publicly
presented these supplemental non-GAAP measures in order to assist the investment community to see
Harmonic through the eyes of management, and thereby enhance understanding of its operating
performance. The non-GAAP measures presented in our press release are gross margins, operating expense, net income
(loss) and net income (loss) per share. The presentation of 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 reconciliation of
non-GAAP measures to GAAP is included with the financial statements contained in the press release
furnished as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
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Exhibit Number |
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Description |
99.1
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Press Release of Harmonic Inc., issued on July 25, 2007. |
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.
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Date:
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July 25, 2007 |
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By:
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/s/Robin N. Dickson |
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Robin N. Dickson |
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Chief Financial Officer |
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Exhibit Index
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Exhibit Number |
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Description |
99.1
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Press Release of Harmonic Inc., issued on July 25, 2007. |
exv99w1
Exhibit 99.1
Harmonic Announces Second Quarter Results
Year-to-Date Sales Up 29%; Continued Expansion of Worldwide Customer Base
Customers Leveraging Power and Breadth of New Solutions
SUNNYVALE, Calif.¾July 25, 2007¾Harmonic Inc. (NASDAQ: HLIT), a leading provider of
broadcast and on-demand video delivery solutions, today announced its preliminary results for the
quarter ended June 29, 2007.
For the second quarter of 2007, the Company reported net sales of $71.3 million, up 34% from $53.3
million in the second quarter of 2006. For the first six months of 2007, net sales were $141.5
million, up 29% from $109.5 million in the same period of 2006. In the second quarter of 2007, the
Companys sales included significant contributions from cable, telco and broadcast customers
deploying a broad range of new products and solutions. The Company also had strong bookings during
the quarter, especially from its domestic and international satellite customers.
Gross margins in the second quarter of 2007 were significantly higher than in the same period of
2006 due to increased sales of new products and higher manufacturing volumes. As expected, gross
margins also increased sequentially from the first quarter of 2007 as a result of a greater
proportion of revenue from higher margin video processing solutions and software and services.
GAAP net income for the second quarter of 2007 was $6.2 million, or $0.08 per diluted share,
compared to a GAAP net loss of $2.9 million, or $0.04 per share for the same period of 2006.
Excluding non-cash accounting charges for stock-based compensation expense and the amortization of
intangibles, the non-GAAP net income for the second quarter of 2007 was $9.0 million, or $0.11 per
diluted share compared to a non-GAAP net loss of $0.2 million, or $0.00 per share for the same
period of 2006. See GAAP to non-GAAP Income/(Loss) Reconciliation below for further information
on the Companys non-GAAP measures.
As of June 29, 2007, the Company had cash, cash equivalents and short-term investments of $82.2
million, compared to $82.9 million as of March 30, 2007. During the second quarter of 2007, the
Company reduced its inventories by $4.2 million compared to the previous quarter.
We are pleased with our sales and earnings growth in the first six months of 2007, as well as our
improved gross margins and inventory management, and our strong bookings in the second quarter of
2007, said Patrick Harshman, President and Chief Executive Officer. Our growing global customer
base is steadily gaining a deeper understanding that the breadth and power of our new products and
solutions provides them with exciting opportunities to extend their video service offerings cost
effectively and reliably.
Our long-standing relationships with cable customers continue to grow stronger. In addition to
industry-leading encoding, video-on-demand edge, and optical access solutions, we are now providing
cable operators with compelling new solutions for switched digital video, time-shifted television,
video-on-demand content streaming and management, video-rich navigation, and higher-speed Internet
data delivery.
While we continue to capture market share among satellite operators with our powerful MPEG-4 AVC
high-definition video encoding solutions, we are also seeing success with our strategy to extend
our
satellite solution footprint to include video-on-demand and innovative video processing. While it
remains difficult to predict the timing of new telco customer deployments and subsequent service
expansions, our new solutions continue to drive new business in the emerging IPTV market. As
we move into the second half of 2007, we are very encouraged by the continued diversification of
our business across a wider range of products and solutions.
Business Outlook
The Company anticipates net sales for the second half of 2007 to be in a range of $150 to $160
million and gross margins to be 44% to 45% on a non-GAAP basis, excluding stock-based compensation
expense and the amortization of intangibles. GAAP gross margins for the same period are anticipated
to be in a range of 42% to 43%.
Conference Call Information
Harmonic will host a conference call today to discuss its financial results at 3:00 p.m. Pacific
(6:00 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 +1.706.634.9047 (conference ID number
6357154). The replay will be available after 6:00 p.m. (Pacific) at the same website address or by
calling +1.706.645.9291 (conference ID number 6357154).
About Harmonic Inc.
Harmonic Inc. is a leading provider of versatile and high performance video solutions that enable
service providers to efficiently deliver the next generation of broadcast and on-demand services
including high definition, video-on-demand, network personal video recording and time-shifted TV.
Cable, satellite, broadcast and telecom service providers can increase revenues and lower
operational expenditures by using Harmonics digital video, broadband optical access and software
solutions to offer consumers the compelling and personalized viewing experience that is driving the
business models of the future.
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. Visit
www.harmonicinc.com for more information.
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 that our gross margins will improve in the coming periods; our beliefs
regarding our long-standing relationships with cable customers continuing to grow stronger; our
beliefs regarding the capturing of market share and the success of our strategies with satellite
operators; our beliefs about continued diversification of our business across a wider range of
products and solutions in the second half of 2007; our expectation that our combined net sales for
the second half of 2007 will be in the range of $150 to $160 million, our gross margins will be 44%
to 45% on a non-GAAP basis, excluding stock-based compensation expense and the amortization of
intangibles, and our GAAP gross margins for the same period will be in a range of 42% to 43%. 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 the possibility that our products will not generate sales
that are commensurate with our expectations; 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 for the year
ended December 31, 2006, our Quarterly Report on Form 10-Q for the quarterly period ended March 30,
2007, 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 herein are trademarks or registered trademarks of
their respective owners.
Harmonic Inc.
Condensed Consolidated Balance Sheets
(In thousands)
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June 29, 2007 |
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December 31, 2006 |
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(Unaudited) |
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(Unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
21,421 |
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$ |
33,454 |
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Short-term investments |
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60,798 |
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58,917 |
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Accounts receivable, net |
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62,476 |
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|
64,674 |
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Inventories |
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42,508 |
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|
42,116 |
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Prepaid expenses and other current assets |
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16,387 |
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|
12,807 |
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Total current assets |
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203,590 |
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|
211,968 |
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Property and equipment, net |
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14,011 |
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|
14,816 |
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Intangibles and other assets |
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53,102 |
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55,178 |
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$ |
270,703 |
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$ |
281,962 |
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Liabilities and stockholders equity |
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Current liabilities: |
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Current portion of long-term debt |
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$ |
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$ |
460 |
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Accounts payable |
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16,716 |
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33,863 |
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Income taxes payable |
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248 |
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|
7,098 |
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Deferred revenue |
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28,844 |
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29,052 |
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Accrued liabilities |
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37,756 |
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|
44,097 |
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Total current liabilities |
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83,564 |
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|
114,570 |
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Accrued excess facilities costs |
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13,403 |
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|
16,434 |
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Other non-current liabilities |
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|
15,317 |
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|
5,824 |
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Total liabilities |
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|
112,284 |
|
|
|
136,828 |
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Stockholders equity: |
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Common stock |
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|
2,087,071 |
|
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|
2,078,941 |
|
Accumulated deficit |
|
|
(1,928,442 |
) |
|
|
(1,933,708 |
) |
Accumulated other comprehensive loss |
|
|
(210 |
) |
|
|
(99 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity |
|
|
158,419 |
|
|
|
145,134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
270,703 |
|
|
$ |
281,962 |
|
|
|
|
|
|
|
|
Harmonic Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
|
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Three Months Ended |
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Six Months Ended |
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June 29, 2007 |
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June 30, 2006 |
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|
June 29, 2007 |
|
|
June 30, 2006 |
|
Net sales |
|
$ |
71,282 |
|
|
$ |
53,270 |
|
|
$ |
141,519 |
|
|
$ |
109,491 |
|
|
|
|
|
|
|
|
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|
|
|
|
|
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|
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Cost of sales |
|
|
40,717 |
|
|
|
31,664 |
|
|
|
83,802 |
|
|
|
68,005 |
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
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|
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|
|
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|
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|
Gross profit |
|
|
30,565 |
|
|
|
21,606 |
|
|
|
57,717 |
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|
|
41,486 |
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Operating expenses: |
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|
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Research and development |
|
|
9,605 |
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|
9,585 |
|
|
|
20,597 |
|
|
|
19,533 |
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Selling, general and administrative |
|
|
15,771 |
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|
|
15,979 |
|
|
|
31,446 |
|
|
|
31,692 |
|
Amortization of intangibles |
|
|
111 |
|
|
|
43 |
|
|
|
222 |
|
|
|
135 |
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|
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|
|
|
|
|
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|
|
|
|
|
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|
|
|
|
|
|
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|
Total operating expenses |
|
|
25,487 |
|
|
|
25,607 |
|
|
|
52,265 |
|
|
|
51,360 |
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|
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|
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|
|
|
|
|
|
|
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|
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|
|
|
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Income (loss) from operations |
|
|
5,078 |
|
|
|
(4,001 |
) |
|
|
5,452 |
|
|
|
(9,874 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income, net |
|
|
997 |
|
|
|
1,303 |
|
|
|
1,970 |
|
|
|
2,203 |
|
|
|
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|
|
|
|
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|
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|
|
|
|
|
|
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|
|
|
|
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|
Income (loss) before income taxes |
|
|
6,075 |
|
|
|
(2,698 |
) |
|
|
7,422 |
|
|
|
(7,671 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (benefit from) income
taxes |
|
|
(174 |
) |
|
|
205 |
|
|
|
57 |
|
|
|
380 |
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
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|
|
|
|
|
|
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|
Net income (loss) |
|
$ |
6,249 |
|
|
$ |
(2,903 |
) |
|
$ |
7,365 |
|
|
$ |
(8,051 |
) |
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
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|
|
|
|
|
|
|
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Net income (loss) per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.08 |
|
|
$ |
(0.04 |
) |
|
$ |
0.09 |
|
|
$ |
(0.11 |
) |
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
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|
|
|
|
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|
Diluted |
|
$ |
0.08 |
|
|
$ |
(0.04 |
) |
|
$ |
0.09 |
|
|
$ |
(0.11 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used to compute net income
(loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
79,361 |
|
|
|
74,167 |
|
|
|
79,164 |
|
|
|
74,134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
80,480 |
|
|
|
74,167 |
|
|
|
80,304 |
|
|
|
74,134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harmonic Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
|
|
|
|
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|
|
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|
|
|
Six Months Ended |
|
|
|
June 29, 2007 |
|
|
June 30, 2006 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
7,365 |
|
|
$ |
(8,051 |
) |
Adjustments to reconcile net income (loss) to cash provided
by (used in) operating activities: |
|
|
|
|
|
|
|
|
Amortization of intangibles |
|
|
2,151 |
|
|
|
458 |
|
Depreciation |
|
|
3,347 |
|
|
|
3,993 |
|
Stock-based compensation |
|
|
2,786 |
|
|
|
3,130 |
|
Loss (gain) on disposal and impairment of fixed assets |
|
|
(60 |
) |
|
|
20 |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
2,172 |
|
|
|
7,630 |
|
Inventories |
|
|
(383 |
) |
|
|
7,564 |
|
Prepaid expenses and other assets |
|
|
(3,706 |
) |
|
|
(3,731 |
) |
Accounts payable |
|
|
(16,913 |
) |
|
|
(3,129 |
) |
Deferred revenue |
|
|
1,622 |
|
|
|
(3,248 |
) |
Income taxes payable |
|
|
(664 |
) |
|
|
319 |
|
Accrued excess facilities costs |
|
|
(2,646 |
) |
|
|
(2,335 |
) |
Accrued and other liabilities |
|
|
(5,054 |
) |
|
|
698 |
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
|
|
(9,983 |
) |
|
|
3,318 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Purchases of investments |
|
|
(53,843 |
) |
|
|
(39,431 |
) |
Proceeds from sale of investments |
|
|
51,928 |
|
|
|
49,024 |
|
Acquisition of property and equipment, net |
|
|
(2,482 |
) |
|
|
(2,404 |
) |
Acquisition costs related to the merger of Entone
Technologies, Inc. |
|
|
(2,466 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities |
|
|
(6,863 |
) |
|
|
7,189 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Repayments under bank line and term loan |
|
|
(460 |
) |
|
|
(418 |
) |
Repayments of capital lease obligations |
|
|
(43 |
) |
|
|
(41 |
) |
Proceeds from issuance of common stock, net |
|
|
5,329 |
|
|
|
2,145 |
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
4,826 |
|
|
|
1,686 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
(13 |
) |
|
|
(41 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
(12,033 |
) |
|
|
12,152 |
|
Cash and cash equivalents at beginning of period |
|
|
33,454 |
|
|
|
37,818 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
21,421 |
|
|
$ |
49,970 |
|
|
|
|
|
|
|
|
Harmonic Inc.
Revenue Information
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
June 29, 2007 |
|
|
|
|
|
|
March 30, 2007 |
|
|
|
|
|
|
June 30, 2006 |
|
|
|
|
|
Product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Video Processing |
|
$ |
28,216 |
|
|
|
40 |
% |
|
$ |
25,948 |
|
|
|
37 |
% |
|
$ |
20,563 |
|
|
|
39 |
% |
Edge & Access |
|
|
31,117 |
|
|
|
44 |
% |
|
|
35,625 |
|
|
|
51 |
% |
|
|
23,434 |
|
|
|
44 |
% |
Software and Services |
|
|
11,949 |
|
|
|
16 |
% |
|
|
8,663 |
|
|
|
12 |
% |
|
|
9,273 |
|
|
|
17 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
71,282 |
|
|
|
|
|
|
$ |
70,236 |
|
|
|
|
|
|
$ |
53,270 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Geography |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
$ |
38,705 |
|
|
|
54 |
% |
|
$ |
42,323 |
|
|
|
60 |
% |
|
$ |
26,949 |
|
|
|
51 |
% |
International |
|
|
32,577 |
|
|
|
46 |
% |
|
|
27,913 |
|
|
|
40 |
% |
|
|
26,321 |
|
|
|
49 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
71,282 |
|
|
|
|
|
|
$ |
70,236 |
|
|
|
|
|
|
$ |
53,270 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable |
|
$ |
47,174 |
|
|
|
66 |
% |
|
$ |
50,526 |
|
|
|
72 |
% |
|
$ |
32,949 |
|
|
|
62 |
% |
Satellite |
|
|
7,783 |
|
|
|
11 |
% |
|
|
9,464 |
|
|
|
13 |
% |
|
|
6,345 |
|
|
|
12 |
% |
Telco & Other |
|
|
16,325 |
|
|
|
23 |
% |
|
|
10,246 |
|
|
|
15 |
% |
|
|
13,976 |
|
|
|
26 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
71,282 |
|
|
|
|
|
|
$ |
70,236 |
|
|
|
|
|
|
$ |
53,270 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, most of which are non-cash or non-recurring in nature,
are not useful in managing its operations and business. Historically, the Company has also publicly
presented these 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 presented here are gross margins, operating expense, net income
(loss) and net income (loss) per share. The presentation of 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 reconciliation of
non-GAAP net income/(loss) to GAAP net income/(loss) is included with the financial statements
contained in this press release. The non-GAAP adjustments described below have historically been
excluded from our non-GAAP measures. These adjustments, and the basis for excluding them, are:
|
|
Restructuring Activities |
The Company has incurred severance costs in cost of sales and in operating expenses in
connection with the closing of its manufacturing and research and development facilities in the
UK. In addition, severance costs were incurred due to a reorganization of its senior management
following the appointment of a new Chief Executive Officer. The Company excludes
one-time costs of this nature in evaluating its ongoing operational performance. We believe that
these costs do not reflect expected future expenses nor do they provide a meaningful comparison
of current versus prior operating results.
The Company has incurred excess facilities costs in operating expenses due to the closing of its
manufacturing and research and development facilities in the UK. The Company excludes one-time
costs of this nature in evaluating its ongoing operational performance. We believe that these
costs do not reflect expected future expenses nor do they provide a meaningful comparison of
current versus prior operating results.
In connection with the restructuring of its operations in the UK, the Company recorded charges
for excess inventory in connection with discontinued products. The Company excludes one-time
costs of this nature in evaluating its ongoing operational performance. We believe that these
costs do not reflect expected future 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 in cost of sales and operating
expenses as required under FAS 123R. The Company excludes stock-based compensation expense
because it believes that this measure is not relevant in evaluating its core operating
performance, either for internal measurement purposes or for period-to-period comparisons
and benchmarking against other public companies.
|
- Amortization of Intangibles
|
The Company has incurred amortization of intangibles related to various acquisitions the
Company has made. Management excludes these items when it evaluates its core operating
performance. We believe that eliminating this expense is useful to investors when comparing
historical and prospective results and comparing such results to other public companies
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 June 29, 2007 |
|
|
Three Months Ended June 30, 2006 |
|
(In thousands) |
|
Gross Margin |
|
|
Operating Expense |
|
|
Net Income |
|
|
Gross Margin |
|
|
Operating Expense |
|
|
Net Loss |
|
GAAP |
|
$ |
30,565 |
|
|
$ |
25,487 |
|
|
$ |
6,249 |
|
|
$ |
21,606 |
|
|
$ |
25,607 |
|
|
$ |
(2,903 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales related to severance costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300 |
|
|
|
|
|
|
|
300 |
|
Cost sales related to stock based compensation expense |
|
|
256 |
|
|
|
|
|
|
|
256 |
|
|
|
268 |
|
|
|
|
|
|
|
268 |
|
Research and development expense related to severance
costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12 |
) |
|
|
12 |
|
Research and development expense related to stock
based compensation expense |
|
|
|
|
|
|
(485 |
) |
|
|
485 |
|
|
|
|
|
|
|
(451 |
) |
|
|
451 |
|
Selling, general and administrative expense related
to severance costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(650 |
) |
|
|
650 |
|
Selling, general and administrative expense related
to stock based compensation expense |
|
|
|
|
|
|
(837 |
) |
|
|
837 |
|
|
|
|
|
|
|
(783 |
) |
|
|
783 |
|
Selling, general and administrative expense related
to excess facilities costs |
|
|
|
|
|
|
(132 |
) |
|
|
132 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangibles from acquisitions |
|
|
964 |
|
|
|
(111 |
) |
|
|
1,075 |
|
|
|
165 |
|
|
|
(43 |
) |
|
|
208 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP |
|
$ |
31,785 |
|
|
$ |
23,922 |
|
|
$ |
9,034 |
|
|
$ |
22,339 |
|
|
$ |
23,668 |
|
|
$ |
(231 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP income (loss) per share |
|
|
|
|
|
|
|
|
|
$ |
0.11 |
|
|
|
|
|
|
|
|
|
|
$ |
(0.00 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP income (loss) per share |
|
|
|
|
|
|
|
|
|
$ |
0.08 |
|
|
|
|
|
|
|
|
|
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per-share calculation basic |
|
|
|
|
|
|
|
|
|
|
79,361 |
|
|
|
|
|
|
|
|
|
|
|
74,167 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per-share calculation diluted |
|
|
|
|
|
|
|
|
|
|
80,480 |
|
|
|
|
|
|
|
|
|
|
|
74,167 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 29, 2007 |
|
|
Six Months Ended June 30, 2006 |
|
|
|
Gross Margin |
|
|
Operating Expense |
|
|
Net Income |
|
|
Gross Margin |
|
|
Operating Expense |
|
|
Net Loss |
|
GAAP |
|
$ |
57,717 |
|
|
$ |
52,265 |
|
|
$ |
7,365 |
|
|
$ |
41,486 |
|
|
$ |
51,360 |
|
|
$ |
(8,051 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales related to severance costs |
|
|
188 |
|
|
|
|
|
|
|
188 |
|
|
|
300 |
|
|
|
|
|
|
|
300 |
|
Cost of sales related to stock based compensation
expense |
|
|
464 |
|
|
|
|
|
|
|
464 |
|
|
|
542 |
|
|
|
|
|
|
|
542 |
|
Cost of sales related to product discontinuance |
|
|
772 |
|
|
|
|
|
|
|
772 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expense related to severance
costs |
|
|
|
|
|
|
(334 |
) |
|
|
334 |
|
|
|
|
|
|
|
(12 |
) |
|
|
12 |
|
Research and development expense related to stock
based compensation expense |
|
|
|
|
|
|
(875 |
) |
|
|
875 |
|
|
|
|
|
|
|
(973 |
) |
|
|
973 |
|
Selling, general and administrative expense related
to severance costs |
|
|
|
|
|
|
(131 |
) |
|
|
131 |
|
|
|
|
|
|
|
(650 |
) |
|
|
650 |
|
Selling, general and administrative expense related
to stock based compensation expense |
|
|
|
|
|
|
(1,447 |
) |
|
|
1,447 |
|
|
|
|
|
|
|
(1,613 |
) |
|
|
1,613 |
|
Selling, general and administrative expense related
to excess facilities costs |
|
|
|
|
|
|
(571 |
) |
|
|
571 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangibles from acquisitions |
|
|
1,929 |
|
|
|
(222 |
) |
|
|
2,151 |
|
|
$ |
323 |
|
|
$ |
(135 |
) |
|
$ |
458 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP |
|
$ |
61,070 |
|
|
$ |
48,685 |
|
|
$ |
14,298 |
|
|
$ |
42,651 |
|
|
$ |
47,977 |
|
|
$ |
(3,503 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP income (loss) per share |
|
|
|
|
|
|
|
|
|
$ |
0.18 |
|
|
|
|
|
|
|
|
|
|
$ |
(0.05 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP income (loss) per share |
|
|
|
|
|
|
|
|
|
$ |
0.09 |
|
|
|
|
|
|
|
|
|
|
$ |
(0.11 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per-share calculation basic |
|
|
|
|
|
|
|
|
|
|
79,164 |
|
|
|
|
|
|
|
|
|
|
|
74,134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per-share calculation diluted |
|
|
|
|
|
|
|
|
|
|
80,304 |
|
|
|
|
|
|
|
|
|
|
|
74,134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|