Delaware | 000-25826 | 77-0201147 |
(State or other jurisdiction of incorporation or organization) | Commission File Number | (I.R.S. Employer Identification Number) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition. |
Item 9.01 | Financial Statements and Exhibits. |
Exhibit No. | Description |
99.1 | Press release of Harmonic Inc. dated August 9, 2016, entitled “Harmonic Announces Second Quarter 2016 Results.” |
Date: August 9, 2016 | HARMONIC INC. | |||||
By: | /s/ Harold Covert | |||||
Harold Covert | ||||||
Chief Financial Officer |
Exhibit No. | Description |
99.1 | Press release of Harmonic Inc. dated August 9, 2016, entitled “Harmonic Announces Second Quarter 2016 Results.” |
• | Strong sequential and year-over-year bookings and revenue growth. |
• | Backlog and deferred revenue grew to a record $190.4 million. |
• | Remained on track to realize $20-$22 million of annualized cost savings from the combination of Harmonic and TVN by the end of calendar year 2016. |
• | Entered into a $10 million engineering collaboration agreement that will extend into 2017. |
• | Several key trials underway on our recently announced VOS Cloud and VOS 360 software-as-a-service offerings with new cloud partners and tier 1 pay TV operators. |
• | Net revenue to be $104.5 million to $109.5 million, which includes Video revenue of $92.5 million to $95.5 million and Cable Edge revenue of $12.0 million to $14.0 million |
• | Gross margin to be 50.0% to 51.0% |
• | Operating expense to be $65.5 million to $66.5 million |
• | Operating loss to be $(12.5) million to $(10.5) million |
• | EPS to be $(0.16) to $(0.14) |
• | Share count for EPS calculation to be approximately 78 million shares of Harmonic common stock |
• | Cash on hand at quarter-end to be $60.0 million to $65.0 million |
• | Net revenue to be $408.0 million to $418.0 million, which includes Video revenue of $348.0 million to $353.0 million and Cable Edge revenue of $60.0 million to $65.0 million |
• | Gross margin to be 50.0% to 51.0% |
• | Operating expense to be $257.5 million to $261.5 million |
• | Operating loss to be $(55.0) million to $(50.0) million |
• | EPS to be $(0.69) to $(0.64) |
• | Share count for EPS calculation to be 78 million to 79 million shares of Harmonic common stock |
• | Capital expenditures to be $14.0 million to $16.0 million |
• | Cash on hand at year-end to be $65.0 million to $70.0 million |
• | Net revenue to be $105.0 million to $110.0 million, which includes Video revenue of $93.0 million to $96.0 million and Cable Edge revenue of $12.0 million to $14.0 million |
• | Gross margin to be 53.0% to 54.0% |
• | Operating expense to be $54.0 million to $55.0 million |
• | Operating income to be $2.0 million to $4.0 million |
• | EPS to be $0.01 to $0.03 |
• | Tax rate to be approximately 15% |
• | Share count for EPS calculation to be approximately 78 million shares of Harmonic common stock |
• | Cash on hand at quarter-end to be $60.0 million to $65.0 million |
• | Net revenue to be $410.0 million to $420.0 million, which includes Video revenue of $350.0 million to $355.0 million and Cable Edge revenue of $60.0 million to $65.0 million |
• | Gross margin to be 53.0% to 54.0% |
• | Operating expense to be $212.0 million to $216.0 million |
• | Operating income to be $5.0 million to $10.0 million |
• | EPS to be $0.01 to $0.06 |
• | Tax rate to be approximately 15% |
• | Share count for EPS calculation to be 78 million to 79 million shares of Harmonic common stock |
• | Capital expenditures to be $14.0 million to $16.0 million |
• | Cash on hand at year-end to be $65.0 million to $70.0 million |
Harold Covert | Blair King |
Chief Financial Officer | Director, Investor Relations |
Harmonic Inc. | Harmonic Inc. |
+1.408.542.2500 | +1.408.490.6172 |
July 1, 2016 | December 31, 2015 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 51,516 | $ | 126,190 | |||
Short-term investments | 13,760 | 26,604 | |||||
Accounts receivable, net | 102,668 | 69,515 | |||||
Inventories | 36,624 | 38,819 | |||||
Prepaid expenses and other current assets | 44,210 | 25,003 | |||||
Total current assets | 248,778 | 286,131 | |||||
Property and equipment, net | 36,517 | 27,012 | |||||
Goodwill | 235,369 | 197,781 | |||||
Intangibles, net | 39,638 | 4,097 | |||||
Other long-term assets | 28,635 | 9,936 | |||||
Total assets | $ | 588,937 | $ | 524,957 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Other debts and capital lease obligations, current | $ | 7,829 | $ | — | |||
Accounts payable | 35,794 | 19,364 | |||||
Income taxes payable | 139 | 307 | |||||
Deferred revenue | 63,518 | 33,856 | |||||
Accrued liabilities | 52,346 | 31,354 | |||||
Total current liabilities | 159,626 | 84,881 | |||||
Convertible debt, long-term | 100,712 | 98,295 | |||||
Other debts and capital lease obligations, long-term | 16,190 | — | |||||
Income taxes payable, long-term | 3,980 | 3,886 | |||||
Deferred tax liabilities, long-term | 957 | — | |||||
Other non-current liabilities | 15,341 | 9,727 | |||||
Total liabilities | 296,806 | 196,789 | |||||
Stockholders' equity: | |||||||
Preferred stock, $0.001 par value, 5,000 shares authorized; no shares issued or outstanding | — | — | |||||
Common stock, $0.001 par value, 150,000 shares authorized; 78,015 and 76,015 shares issued and outstanding at July 1, 2016 and December 31, 2015, respectively | 78 | 76 | |||||
Additional paid-in capital | 2,245,120 | 2,236,418 | |||||
Accumulated deficit | (1,949,715 | ) | (1,903,908 | ) | |||
Accumulated other comprehensive loss | (3,352 | ) | (4,418 | ) | |||
Total stockholders' equity | 292,131 | 328,168 | |||||
Total liabilities and stockholders' equity | $ | 588,937 | $ | 524,957 |
Three months ended | Six months ended | ||||||||||||||
July 1, 2016 | July 3, 2015 | July 1, 2016(1) | July 3, 2015 | ||||||||||||
Net revenue | $ | 108,759 | $ | 103,103 | $ | 190,591 | $ | 207,119 | |||||||
Cost of revenue | 57,667 | 48,718 | 98,845 | 97,706 | |||||||||||
Gross profit | 51,092 | 54,385 | 91,746 | 109,413 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 26,507 | 21,816 | 50,070 | 44,145 | |||||||||||
Selling, general and administrative | 36,516 | 31,281 | 69,386 | 62,477 | |||||||||||
Amortization of intangibles | 4,232 | 1,446 | 6,597 | 2,892 | |||||||||||
Restructuring and asset impairment charges | 1,903 | 185 | 4,515 | 229 | |||||||||||
Total operating expenses | 69,158 | 54,728 | 130,568 | 109,743 | |||||||||||
Loss from operations | (18,066 | ) | (343 | ) | (38,822 | ) | (330 | ) | |||||||
Interest (expense) income, net | (2,651 | ) | 17 | (5,072 | ) | 72 | |||||||||
Other income (expense), net | 332 | 59 | 323 | (447 | ) | ||||||||||
Loss on impairment of long-term investment | — | — | (1,476 | ) | (2,505 | ) | |||||||||
Loss before income taxes | (20,385 | ) | (267 | ) | (45,047 | ) | (3,210 | ) | |||||||
Provision for income taxes | 242 | 727 | 760 | 441 | |||||||||||
Net loss | $ | (20,627 | ) | $ | (994 | ) | $ | (45,807 | ) | $ | (3,651 | ) | |||
Net loss per share: | |||||||||||||||
Basic and diluted | $ | (0.27 | ) | $ | (0.01 | ) | $ | (0.59 | ) | $ | (0.04 | ) | |||
Shares used in per share calculation: | |||||||||||||||
Basic and diluted | 77,342 | 88,426 | 77,168 | 88,541 |
Six months ended | |||||||
July 1, 2016 | July 3, 2015 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (45,807 | ) | $ | (3,651 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Amortization of intangibles | 8,322 | 3,439 | |||||
Depreciation | 7,737 | 6,930 | |||||
Stock-based compensation | 5,862 | 8,018 | |||||
Amortization of discount on convertible debt | 2,417 | — | |||||
Restructuring, asset impairment and loss on retirement of fixed assets | 1,687 | 252 | |||||
Loss on impairment of long-term investment | 1,476 | 2,505 | |||||
Deferred income taxes | 38 | — | |||||
Provision for excess and obsolete inventories | 5,203 | 843 | |||||
Allowance for doubtful accounts, returns and discounts | 697 | (713 | ) | ||||
Excess tax benefits from stock-based compensation | — | (22 | ) | ||||
Other non-cash adjustments, net | 144 | — | |||||
Changes in assets and liabilities, net of effects of acquisition: | |||||||
Accounts receivable | (16,000 | ) | (1,222 | ) | |||
Inventories | 3,158 | (595 | ) | ||||
Prepaid expenses and other assets | (5,039 | ) | (11,635 | ) | |||
Accounts payable | 2,168 | 6,415 | |||||
Deferred revenue | 26,795 | 9,833 | |||||
Income taxes payable | (122 | ) | (815 | ) | |||
Accrued and other liabilities | (7,029 | ) | (5,994 | ) | |||
Net cash (used in) provided by operating activities | (8,293 | ) | 13,588 | ||||
Cash flows from investing activities: | |||||||
Acquisition of business, net of cash acquired | (72,989 | ) | — | ||||
Purchases of investments | — | (12,986 | ) | ||||
Proceeds from sales and maturities of investments | 12,842 | 15,744 | |||||
Purchases of property and equipment | (7,708 | ) | (7,505 | ) | |||
Purchases of long-term investments | — | (85 | ) | ||||
Net cash used in investing activities | (67,855 | ) | (4,832 | ) | |||
Cash flows from financing activities: | |||||||
Payment of convertible debt issuance costs | (582 | ) | — | ||||
Increase in other debts and capital leases | 5,972 | — | |||||
Repayment of other debts and capital leases | (6,524 | ) | — | ||||
Payments for repurchase of common stock | — | (12,171 | ) | ||||
Proceeds from common stock issued to employees | 3,737 | 9,133 | |||||
Payment of tax withholding obligations related to net share settlements of restricted stock units | (1,034 | ) | (2,642 | ) | |||
Excess tax benefits from stock-based compensation | — | 22 | |||||
Net cash provided by (used in) financing activities | 1,569 | (5,658 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (95 | ) | (81 | ) | |||
Net (decrease) increase in cash and cash equivalents | (74,674 | ) | 3,017 | ||||
Cash and cash equivalents at beginning of period | 126,190 | 73,032 | |||||
Cash and cash equivalents at end of period | $ | 51,516 | $ | 76,049 |
Three months ended | Three months ended | Three months ended | |||||||||||||||||||||||||||||
July 1, 2016 | April 1, 2016 | July 3, 2015 | |||||||||||||||||||||||||||||
GAAP | Adjustment(1) | Non-GAAP | GAAP(2) | Adjustment(1) | Non-GAAP(2) | GAAP and Non-GAAP(3) | |||||||||||||||||||||||||
Product | |||||||||||||||||||||||||||||||
Video Products | $ | 62,158 | $ | 205 | $ | 62,363 | 57% | $ | 44,212 | $ | 355 | $ | 44,567 | 54% | $ | 56,096 | 54% | ||||||||||||||
Cable Edge | 15,751 | — | 15,751 | 14% | 13,432 | — | 13,432 | 16% | 21,351 | 21% | |||||||||||||||||||||
Services and Support | 30,850 | 575 | 31,425 | 29% | 24,188 | 268 | 24,456 | 30% | 25,656 | 25% | |||||||||||||||||||||
Total | $ | 108,759 | $ | 780 | $ | 109,539 | 100% | $ | 81,832 | $ | 623 | $ | 82,455 | 100% | $ | 103,103 | 100% | ||||||||||||||
Geography | |||||||||||||||||||||||||||||||
Americas | $ | 57,681 | $ | 150 | $ | 57,831 | 53% | $ | 48,977 | $ | 81 | $ | 49,058 | 59% | $ | 60,342 | 58% | ||||||||||||||
EMEA | 33,456 | 488 | 33,944 | 31% | 19,855 | 401 | 20,256 | 25% | 27,360 | 27% | |||||||||||||||||||||
APAC | 17,622 | 142 | 17,764 | 16% | 13,000 | 141 | 13,141 | 16% | 15,401 | 15% | |||||||||||||||||||||
Total | $ | 108,759 | $ | 780 | $ | 109,539 | 100% | $ | 81,832 | $ | 623 | $ | 82,455 | 100% | $ | 103,103 | 100% | ||||||||||||||
Market | |||||||||||||||||||||||||||||||
Service Provider | $ | 64,921 | $ | 329 | $ | 65,250 | 60% | $ | 51,270 | $ | 150 | $ | 51,420 | 62% | $ | 64,041 | 62% | ||||||||||||||
Broadcast and Media | 43,838 | 451 | 44,289 | 40% | 30,562 | 473 | 31,035 | 38% | 39,062 | 38% | |||||||||||||||||||||
Total | $ | 108,759 | $ | 780 | $ | 109,539 | 100% | $ | 81,832 | $ | 623 | $ | 82,455 | 100% | $ | 103,103 | 100% |
Three months ended | |||||||||||||||
July 1, 2016 | |||||||||||||||
Revenue | Gross Profit | Total Operating Expense | Income (loss) from Operations | Net loss | |||||||||||
GAAP | $ | 108,759 | $ | 51,092 | $ | 69,158 | $ | (18,066 | ) | $ | (20,627 | ) | |||
Cable Edge inventory charge | — | 4,519 | — | 4,519 | 4,519 | ||||||||||
Acquisition accounting impact related to TVN deferred revenue | 780 | 780 | — | 780 | 780 | ||||||||||
Stock-based compensation in cost of revenue | — | 424 | — | 424 | 424 | ||||||||||
Stock-based compensation in research and development | — | — | (841 | ) | 841 | 841 | |||||||||
Stock-based compensation in selling, general and administrative | — | — | (1,503 | ) | 1,503 | 1,503 | |||||||||
Amortization of intangibles | — | 1,307 | (4,232 | ) | 5,539 | 5,539 | |||||||||
Restructuring and related charges | — | 6 | (1,903 | ) | 1,909 | 1,909 | |||||||||
TVN acquisition-and integration-related costs | — | 433 | (2,970 | ) | 3,403 | 3,403 | |||||||||
Non-cash interest expenses related to convertible notes | — | — | — | — | 1,233 | ||||||||||
Discrete tax items and tax effect of non-GAAP adjustments | — | — | — | — | 278 | ||||||||||
Non-GAAP | $ | 109,539 | $ | 58,561 | $ | 57,709 | $ | 852 | $ | (198 | ) | ||||
As a % of revenue (GAAP) | 47.0 | % | 63.6 | % | (16.6 | )% | (19.0 | )% | |||||||
As a % of revenue (Non-GAAP) | 53.5 | % | 52.7 | % | 0.8 | % | (0.2 | )% | |||||||
Diluted net loss per share: | |||||||||||||||
Diluted net loss per share-GAAP | $ | (0.27 | ) | ||||||||||||
Diluted net loss per share-Non-GAAP | $ | 0.00 | |||||||||||||
Shares used to compute diluted net loss per share: | |||||||||||||||
GAAP | 77,342 | ||||||||||||||
Non-GAAP | 77,342 | ||||||||||||||
Three months ended | |||||||||||||||
April 1, 2016 | |||||||||||||||
Revenue | Gross Profit | Total Operating Expense | Loss from Operations | Net Loss | |||||||||||
GAAP | $ | 81,832 | $ | 40,654 | $ | 61,410 | $ | (20,756 | ) | $ | (25,180 | ) | |||
Acquisition accounting impacts related to TVN deferred revenue | 623 | 623 | — | 623 | 623 | ||||||||||
Acquisition accounting impacts related to TVN fair value of inventory | — | 189 | — | 189 | 189 | ||||||||||
Stock-based compensation in cost of revenue | — | 227 | — | 227 | 227 | ||||||||||
Stock-based compensation in research and development | — | — | (969 | ) | 969 | 969 | |||||||||
Stock-based compensation in selling, general and administrative | — | — | (1,898 | ) | 1,898 | 1,898 | |||||||||
Amortization of intangibles | — | 418 | (2,365 | ) | 2,783 | 2,783 | |||||||||
Restructuring and related charges | — | (29 | ) | (2,612 | ) | 2,583 | 2,583 | ||||||||
TVN acquisition-and integration-related costs | — | 58 | (3,038 | ) | 3,096 | 3,096 | |||||||||
Impairment of long-term investment | — | — | — | — | 1,476 | ||||||||||
Non-cash interest expenses related to convertible notes | — | — | — | — | 1,187 | ||||||||||
Discrete tax items and tax effect of non-GAAP adjustments | — | — | — | — | 1,963 | ||||||||||
Non-GAAP | $ | 82,455 | $ | 42,140 | $ | 50,528 | $ | (8,388 | ) | $ | (8,186 | ) | |||
As a % of revenue (GAAP) | 49.7 | % | 75.0 | % | (25.4 | )% | (30.8 | )% | |||||||
As a % of revenue (Non-GAAP) | 51.1 | % | 61.3 | % | (10.2 | )% | (9.9 | )% | |||||||
Diluted net loss per share: | |||||||||||||||
Diluted net loss per share-GAAP | $ | (0.33 | ) | ||||||||||||
Diluted net loss per share-Non-GAAP | $ | (0.11 | ) | ||||||||||||
Shares used to compute diluted net loss per share: | |||||||||||||||
GAAP | 76,996 | ||||||||||||||
Non-GAAP | 76,996 |
Three months ended | |||||||||||||||
July 3, 2015 | |||||||||||||||
Revenue | Gross Profit | Total Operating Expense | Income (Loss) from Operations | Net Income (Loss) | |||||||||||
GAAP | $ | 103,103 | $ | 54,385 | $ | 54,728 | $ | (343 | ) | $ | (994 | ) | |||
Stock-based compensation in cost of revenue | — | 422 | — | 422 | 422 | ||||||||||
Stock-based compensation in research and development | — | — | (1,027 | ) | 1,027 | 1,027 | |||||||||
Stock-based compensation in selling, general and administrative | — | — | (2,435 | ) | 2,435 | 2,435 | |||||||||
Amortization of intangibles | — | 86 | (1,446 | ) | 1,532 | 1,532 | |||||||||
Restructuring and related charges | — | — | (185 | ) | 185 | 185 | |||||||||
Discrete tax items and tax effect of non-GAAP adjustments | — | — | — | — | (393 | ) | |||||||||
Non-GAAP | $ | 103,103 | $ | 54,893 | $ | 49,635 | $ | 5,258 | $ | 4,214 | |||||
As a % of revenue (GAAP) | 52.7 | % | 53.1 | % | (0.3 | )% | (1.0 | )% | |||||||
As a % of revenue (Non-GAAP) | 53.2 | % | 48.1 | % | 5.1 | % | 4.1 | % | |||||||
Diluted net income (loss) per share: | |||||||||||||||
Diluted net loss per share-GAAP | $ | (0.01 | ) | ||||||||||||
Diluted net income per share-Non-GAAP | $ | 0.05 | |||||||||||||
Shares used to compute diluted net income (loss) per share: | |||||||||||||||
GAAP | 88,426 | ||||||||||||||
Non-GAAP | 89,444 |
Q3 2016 Financial Guidance | |||||
Revenue | Gross Profit | Total Operating Expense | Income(loss) from Operations | Net Income(loss) | |
GAAP | $104.5 to $109.5 | $53.0 to $56.0 | $65.5 to $66.5 | $(12.5) to $(10.5) | ($12.5) to ($10.5) |
Acquisition accounting impact related to TVN deferred revenue | Approx. $0.5 | Approx. $0.5 | — | Approx. $0.5 | Approx. $0.5 |
Stock-based compensation expense | — | Approx. $0.5 | Approx. ($3.0) | Approx. $3.5 | Approx. $3.5 |
Amortization of intangibles | — | Approx. $1.5 | Approx. ($3.5) | Approx. $5.0 | Approx. $5.0 |
Restructuring and related charges and TVN acquisition/integration costs | — | Approx. $0.5 | Approx. ($5.0) | Approx. $5.5 | Approx. $5.5 |
Non-cash interest expense related to convertible notes | — | — | — | — | Approx. $1.0 |
Discrete tax items and tax effect of non-GAAP adjustments | — | — | — | — | Approx. ($2.5) |
Approx. $0.5 | Approx. $3.0 | Approx. ($11.5) | Approx. $14.5 | Approx. $13.0 | |
Non-GAAP | $105.0 to $110.0 | $56.0 to $59.0 | $54.0 to $55.0 | $2.0 to $4.0 | $0.5 to $2.5 |
As a % of revenue (GAAP) | 50% to 51% | 61% to 63% | (12)% to (9)% | (12)% to (10)% | |
As a % of revenue (Non-GAAP) | 53% to 54% | 50% to 52% | 2% to 4% | 0% to 2% | |
Diluted income (loss) per share: | |||||
Diluted net loss per share-GAAP | $(0.16) to $(0.14) | ||||
Diluted net income per share-Non-GAAP | $0.01 to $0.03 | ||||
Shares used to compute diluted income (loss) per share: | |||||
GAAP and Non-GAAP | 78.0 | ||||
2016 Financial Guidance | |||||
Revenue | Gross Profit | Total Operating Expense | Income(loss) from Operations | Net Income(loss) | |
GAAP | $408.0 to $418.0 | $202.5 to $211.5 | $257.5 to $261.5 | $(55.0) to $(50.0) | $(54.0) to $(50.0) |
Acquisition accounting impact related to TVN deferred revenue | Approx. $2.0 | Approx. $2.0 | — | Approx. $2.0 | Approx. $2.0 |
Acquisition accounting impact related to TVN fair value of inventory | — | Approx. $0.2 | — | Approx. $0.2 | Approx. $0.2 |
Stock-based compensation expense | — | Approx. $2.0 | Approx. ($12.0) | Approx. $14.0 | Approx. $14.0 |
Amortization of intangibles | — | Approx. $4.3 | Approx. ($11.0) | Approx. $15.3 | Approx. $15.3 |
Restructuring and related charges and TVN acquisition/integration costs | — | Approx. $1.5 | Approx. ($22.5) | Approx. $24.0 | Approx. $24.0 |
Cable Edge inventory charge | — | Approx. $4.5 | — | Approx. $4.5 | Approx. $4.5 |
Non-cash interest expense related to convertible notes | — | — | — | — | Approx. $4.5 |
Discrete tax items and tax effect of non-GAAP adjustments | — | — | — | — | Approx. ($10.0) |
Approx. $2.0 | Approx. $14.5 | Approx. ($45.5) | Approx. $60.0 | Approx. $54.5 | |
Non-GAAP | $410.0 to $420.0 | $217.0 to $226.0 | $212.0 to $216.0 | $5.0 to $10.0 | $0.5 to $4.5 |
As a % of revenue (GAAP) | 50% to 51% | 62% to 63% | (13)% to (12)% | (13)% to (12)% | |
As a % of revenue (Non-GAAP) | 53% to 54% | 51% to 52% | 1% to 2% | 0% to 1% | |
Diluted income (loss) per share: | |||||
Diluted net loss per share-GAAP | $(0.69) to $(0.64) | ||||
Diluted net income per share-Non-GAAP | $0.01 to $0.06 | ||||
Shares used to compute diluted income (loss) per share: | |||||
GAAP and Non-GAAP | 78 to 79 |