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
October 29, 2018
Date of Report (Date of earliest event reported)
HARMONIC INC.
(Exact name of Registrant as specified in its charter)
Delaware | 000-25826 | 77-0201147 |
(State or other jurisdiction of incorporation or organization) | Commission File Number | (I.R.S. Employer Identification Number) |
4300 North First Street
San Jose, CA 95134
(408) 542-2500
(Address, including zip code, and telephone number, including area code, of Registrant’s 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):
¨ | 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)) |
¨ | Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 | Results of Operations and Financial Condition. |
On October 29, 2018, Harmonic Inc. (“Harmonic”) issued a press release regarding its unaudited financial results for the quarter ended September 28, 2018. In the press release, Harmonic also announced that it would be holding a conference call on October 29, 2018 to discuss its financial results for the quarter ended September 28, 2018. 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 Item 2.02 of this Current Report on Form 8-K and Exhibit 99.1 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 Item 2.02 of this Current Report on Form 8-K and Exhibit 99.1 furnished herewith shall not be incorporated by reference into any filing by Harmonic under the Securities Act of 1933, as amended (the “Securities Act”), or under the Exchange Act.
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
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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.
Date: October 29, 2018 | HARMONIC INC. | |||||
By: | /s/ Sanjay Kalra | |||||
Sanjay Kalra | ||||||
Chief Financial Officer | ||||||
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Exhibit 99.1
 |  |
FOR IMMEDIATE RELEASE
Harmonic Announces Third Quarter 2018 Results
Total Revenue Up 9% and Cable Access Segment Revenue Up 138% Year Over Year
SAN JOSE, California, October 29, 2018 - Harmonic Inc. (NASDAQ: HLIT) today announced its unaudited results for the third quarter of 2018.
“Continued execution of our CableOS and Video strategies drove double-digit growth of non-GAAP revenue and operating profit year over year,” said Patrick Harshman, president and chief executive officer of Harmonic. “Shipments of CableOS nodes for new distributed access architectures were up 174% sequentially, underscoring positive momentum in our Cable Access segment. Video segment gross margin of 57.2% and operating margin of 7.2% highlight our ongoing profitable transformation to software and SaaS.”
Q3 Financial and Business Highlights
• | GAAP revenue $100.6 million, up 9% year over year; non-GAAP revenue $101.4 million, up 11% year over year. |
• | Cable Access segment revenue: GAAP $27.3 million, up 138% year over year; non-GAAP $28.1 million, up 153% year over year. |
• | Video segment operating margin: 7.2%, fifth consecutive quarter of positive segment operating income. |
• | Operating income: GAAP loss $3.7 million and non-GAAP income $5.7 million, compared to GAAP loss $14.2 million and non-GAAP income $1.3 million in the year ago period. |
• | EPS: GAAP net loss per share 9 cents and non-GAAP net income per share 4 cents, compared to GAAP net loss per share 19 cents and non-GAAP net loss per share 1 cent in the year ago period. |
• | Ended the quarter with $61.7 million in cash and cash equivalents, compared to $54.1 million in the prior quarter. |
• | CableOS deployments continued to scale, surpassing 480,000 served cable modems, up 20% quarter over quarter. |
• | CableOS global design wins and execution continues with 25 deployments and trials underway, up 25% quarter over quarter. |
• | Over 35,000 OTT channels deployed globally, up 4% quarter over quarter, powered in part by new Video SaaS wins. |
Select Financial Information
GAAP | Non-GAAP | |||||||||||||||||||||||
Key Financial Results | Q3 2018 | Q2 2018 | Q3 2017 | Q3 2018 | Q2 2018 | Q3 2017 | ||||||||||||||||||
(in millions, except per share data) | ||||||||||||||||||||||||
Net revenue | $ | 100.6 | $ | 99.2 | $ | 92.0 | $ | 101.4 | $ | 99.4 | $ | 91.6 | ||||||||||||
Net income (loss) | $ | (7.8 | ) | $ | (2.9 | ) | $ | (15.6 | ) | $ | 3.4 | $ | 4.6 | $ | (0.5 | ) | ||||||||
Diluted EPS | $ | (0.09 | ) | $ | (0.03 | ) | $ | (0.19 | ) | $ | 0.04 | $ | 0.05 | $ | (0.01 | ) | ||||||||
Other Financial Information | Q3 2018 | Q2 2018 | Q3 2017 | |||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Bookings for the quarter | $ | 79.5 | $ | 107.9 | $ | 96.0 | ||||||||||||||||||
Backlog and deferred revenue as of quarter end | $ | 207.6 | $ | 230.4 | $ | 200.9 | ||||||||||||||||||
Cash as of quarter end | $ | 61.7 | $ | 54.1 | $ | 50.0 | ||||||||||||||||||
Explanations regarding our use of non-GAAP financial measures and related definitions, and reconciliations of our GAAP and non-GAAP measures, are provided in the sections below entitled “Use of Non-GAAP Financial Measures” and “GAAP to Non-GAAP Reconciliations”.
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Financial Guidance
GAAP Financial Guidance | Q4 2018 | 2018 | ||||||||||||||
Low | High | Low | High | |||||||||||||
(in millions, except percentages and per share data) | ||||||||||||||||
Net Revenue | $ | 104.7 | $ | 117.7 | $ | 394.5 | $ | 407.5 | ||||||||
Video | $ | 80.0 | $ | 83.0 | $ | 304.0 | $ | 307.0 | ||||||||
Cable Access | $ | 24.7 | $ | 34.7 | $ | 90.5 | $ | 100.5 | ||||||||
Gross Margin % | 48.0 | % | 48.5 | % | 50.0 | % | 50.5 | % | ||||||||
Operating Expenses | $ | 52.5 | $ | 53.5 | $ | 213.7 | $ | 214.7 | ||||||||
Operating Income (Loss) | $ | (3.2 | ) | $ | 4.2 | $ | (15.6 | ) | $ | (8.2 | ) | |||||
Tax Expense | $ | (0.5 | ) | $ | (0.5 | ) | $ | (3.3 | ) | $ | (3.3 | ) | ||||
EPS | $ | (0.08 | ) | $ | 0.01 | $ | (0.36 | ) | $ | (0.28 | ) | |||||
Shares | 86.8 | 89.2 | 85.7 | 85.7 | ||||||||||||
Cash | $ | 55.0 | $ | 65.0 | $ | 55.0 | $ | 65.0 | ||||||||
Non-GAAP Financial Guidance | Q4 2018 | 2018 | ||||||||||||||
Low | High | Low | High | |||||||||||||
(in millions, except percentages and per share data) | ||||||||||||||||
Net Revenue | $ | 105.0 | $ | 118.0 | $ | 396.0 | $ | 409.0 | ||||||||
Video | $ | 80.0 | $ | 83.0 | $ | 304.0 | $ | 307.0 | ||||||||
Cable Access | $ | 25.0 | $ | 35.0 | $ | 92.0 | $ | 102.0 | ||||||||
Gross Margin % | 49.0 | % | 50.0 | % | 52.5 | % | 53.0 | % | ||||||||
Operating Expenses | $ | 49.0 | $ | 50.0 | $ | 192.5 | $ | 193.5 | ||||||||
Operating Income | $ | 2.2 | $ | 9.6 | $ | 15.1 | $ | 22.5 | ||||||||
Tax Rate | 16 | % | 16 | % | 16 | % | 16 | % | ||||||||
EPS | $ | 0.01 | $ | 0.07 | $ | 0.09 | $ | 0.16 | ||||||||
Shares | 89.2 | 89.2 | 86.9 | 86.9 | ||||||||||||
Cash | $ | 55.0 | $ | 65.0 | $ | 55.0 | $ | 65.0 | ||||||||
See “Use of Non-GAAP Financial Measures” and “GAAP to Non-GAAP Reconciliations” below.
Conference Call Information
Harmonic will host a conference call to discuss its financial results at 2:00 p.m. PT (5:00 p.m. ET) on Monday, October 29, 2018. A listen-only broadcast of the conference call can be accessed either from the Company's website at www.harmonicinc.com or by calling 1.574.990.1032 or +1.800.240.9147 (passcode 7595808). A replay will be available after 4:30 p.m. PT on the same web site or by calling +1.404.537.3406 or +1.855.859.2056 (passcode 7595808).
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About Harmonic Inc.
Harmonic (NASDAQ: HLIT), the worldwide leader in video delivery technology and services, enables media companies and service providers to deliver ultra-high-quality broadcast and OTT video services to consumers globally. The company has also revolutionized cable access networking via the industry's first virtualized cable access solution, enabling cable operators to more flexibly deploy gigabit internet service to consumers' homes and mobile devices. Whether simplifying OTT video delivery via innovative cloud and software-as-a-service (SaaS) technologies, or powering the delivery of gigabit internet cable services, Harmonic is changing the way media companies and service providers monetize live and VOD content on every screen. More information is available at 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 expectations regarding: GAAP net revenue, GAAP gross margins, GAAP operating expenses, GAAP operating loss, GAAP tax expense, GAAP EPS, non-GAAP revenue, non-GAAP gross margins, non-GAAP operating expenses, non-GAAP operating income (loss), non-GAAP tax rate, non-GAAP EPS, share count and cash. Our expectations 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, in no particular order, the following: the trends toward more high-definition, on-demand and anytime, anywhere video will not continue to develop at its current pace or will expire; the possibility that our products will not generate sales that are commensurate with our expectations or that our cost of revenue or operating expenses may exceed our expectations; the mix of products and services sold in various geographies and the effect it has on gross margins; delays or decreases in capital spending in the cable, satellite, telco, broadcast and media industries; customer concentration and consolidation; the impact of general economic conditions on our sales and operations; our ability to develop new and enhanced products in a timely manner and market acceptance of our new or existing products; losses of one or more key customers; risks associated with our international operations; exchange rate fluctuations of the currencies in which we conduct business; risks associated with our CableOS™ and VOS® product solutions; dependence on market acceptance of various types of broadband services, on the adoption of new broadband technologies and on broadband industry trends; inventory management; the lack of timely availability of parts or raw materials necessary to produce our products; the impact of increases in the prices of raw materials and oil; the effect of competition, on both revenue and gross margins; difficulties associated with rapid technological changes in our markets; risks associated with unpredictable sales cycles; our dependence on contract manufacturers and sole or limited source suppliers; and the effect on our business of natural disasters. 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 our most recent Annual Report on Form 10-K for the year ended December 31, 2017, our most recent Quarterly Report on Form 10-Q and our Current Reports on Form 8-K. The forward-looking statements in this press release are based on information available to the Company as of the date hereof, and Harmonic disclaims any obligation to update any forward-looking statements.
Use of Non-GAAP Financial Measures
The Company reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP” or referred to herein as “reported”). However, management believes that certain non-GAAP financial measures provide management and other users with additional meaningful financial information that should be considered when assessing our ongoing performance. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business, establish operating budgets, set internal measurement targets and make operating decisions.
These non-GAAP measures are not in accordance with, or an alternative for, measures prepared in accordance with generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. The Company believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Harmonic's results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Harmonic's results of operations in conjunction with the corresponding GAAP measures.
The Company believes that the presentation of non-GAAP measures when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and its historical and projected results of operations. Non-GAAP financial measures should be viewed in addition to, and not as an alternative to, the Company’s reported results prepared in accordance with GAAP.
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The non-GAAP measures presented here are: revenue, segment revenue, gross profit, operating expenses, income (loss) from operations, non-operating expenses, net income (loss) (including those amounts as a percentage of revenue) and net income (loss) per diluted 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 the historical non-GAAP financial measures discussed in this press release to the most directly comparable historical GAAP financial measures is included with the financial statements provided with this press release. The non-GAAP adjustments described below have historically been excluded from our GAAP financial measures.
Our non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects:
Cable Access inventory charge - Harmonic from time to time incurs inventory impairment charges associated with material business shifts, such as the repositioning of our Cable Access segment. We exclude these items, because we do not believe they are reflective of our ongoing long-term business and operating results.
Stock-based compensation - Although stock-based compensation is a key incentive offered to our employees, we continue to evaluate our business performance excluding stock-based compensation expenses. We believe that management is limited in its ability to project the impact stock-based compensation would have on our operating results. In addition, for comparability purposes, we believe it is useful to provide a non-GAAP financial measure that excludes stock-based compensation in order to better understand the long-term performance of our core business and to facilitate the comparison of our results to the results of our peer companies.
Amortization of intangibles - A portion of the purchase price of our acquisitions is generally allocated to intangible assets, and is subject to amortization. However, Harmonic does not acquire businesses on a predictable cycle. Additionally, the amount of an acquisition’s purchase price allocated to intangible assets and the term of its related amortization can vary significantly and are unique to each acquisition. Therefore, we believe that the presentation of non-GAAP financial measures that adjust for the amortization of intangible assets provides investors and others with a consistent basis for comparison across accounting periods.
Restructuring and related charges - Harmonic from time to time incurs restructuring charges which primarily consist of employee severance, one-time termination benefits related to the reduction of its workforce, lease exit costs, and other costs. These charges are associated with material business shifts. We exclude these items because we do not believe they are reflective of our ongoing long-term business and operating results.
TVN acquisition- and integration-related costs - As a result of the Company’s acquisition of Thomson Video Networks (TVN) in February 2016, the Company incurred acquisition- and integration-related expenses, including legal, accounting and other professional services as well as integration-related costs that are not expected to generate future benefits once the integration is fully consummated. We exclude these transaction and integration expenses because we believe these expenses have no direct correlation to the operation of our business, and because we believe that the non-GAAP financial measures excluding these costs provide meaningful supplemental information regarding our operational performance and liquidity. In addition, excluding these costs from the non-GAAP measures facilitates comparisons to our historical operating results and comparisons to peer company operating results.
Deferred revenue fair value adjustment - We define non-GAAP net revenues as net revenues excluding the impact of purchase accounting. In connection with our acquisitions, the acquired deferred revenue balances were required to be written down due to purchase accounting in accordance with GAAP. The impact on revenues related to purchase accounting as a result of these transactions, limits the comparability of revenues between periods. We do not expect revenues generated from new contracts to be similarly impacted by purchase accounting adjustments. Accordingly, we believe presenting non-GAAP net revenues to exclude the impact of purchase accounting adjustments aids in the comparability between periods and in assessing our overall operating performance.
Non-cash interest expense related to convertible notes - We record the accretion of the debt discount related to the equity component and amortization of issuance costs as non-cash interest expense. We believe that excluding these costs provides meaningful supplemental information regarding operational performance and liquidity, along with enhancing investors’ ability to view the Company’s results from management’s perspective. In addition, we believe excluding these costs from the non-GAAP measures facilitates comparisons to our historical operating results and comparisons to peer company operating results.
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Accounting impact related to warrant amortization - We issued a warrant to a customer, Comcast Corporation, in September 2016 pursuant to which Comcast may purchase up to 7.8 million shares of Harmonic common stock. Vesting of the warrant shares is subject to Comcast achieving certain milestones and purchase volume commitments, and therefore the accounting guidance requires that the value of the warrant be recorded as a reduction in the Company’s net revenues. Until final vesting, changes in the fair value of the warrant share will be marked to market and any adjustment as such will also be recorded in revenue. The change in fair value together with vested warrant shares are amortized to revenue using a ratio of revenue recognized from the customer in the period compared to total revenue expected from the customer. We have excluded the effect of warrant amortization in our non-GAAP financial measures. Management believes it is useful to exclude the charge for the fair value of the warrant shares in order to better understand the effects of these items on our total revenues and gross margin, as well as on Cable Access segment revenue.
Loss on impairment of long-term investments - We exclude the effect of any other-than-temporary impairment of our long-term investments in calculating our non-GAAP financial measures. We exclude these items because we do not believe they are reflective of our ongoing long-term business and operating results.
Gain (loss) on equity investments - We exclude the change in fair value and gain (loss) from sale of our equity investments in calculating our non-GAAP financial measures. We exclude these items because we do not believe they are reflective of our ongoing long-term business and operating results.
Avid litigation settlement and associated legal fees - In the third quarter of fiscal 2017, we settled the patent litigation with Avid Technology, Inc. by entering into a settlement and patent portfolio cross-license agreement with Avid. Under the agreement, we agreed to pay Avid a one-time non-recurring amount of $6 million in installments. $2.5 million was paid upfront in October 2017 and $1.5 million and $2.0 million will be paid in 2019 and 2020, respectively. Also, the Avid litigation costs of approximately $1.4 million and $0.7 million in the third and fourth fiscal quarter of 2017, respectively, were significantly higher compared to prior periods. We excluded these expenses from our non-GAAP results because we do not believe they are reflective of our ongoing long-term business and operating results.
Discrete tax items and tax effect of non-GAAP adjustments - The income tax effect of non-GAAP adjustments relates to the tax effect of the adjustments that we incorporate into non-GAAP financial measures in order to provide a more meaningful measure of non-GAAP net income.
CONTACTS:
Sanjay Kalra | Nicole Noutsios |
Chief Financial Officer | Investor Relations |
Harmonic Inc. | Harmonic Inc. |
+1.408.490.6031 | +1.510.315.1003 |
5
Harmonic Inc.
Preliminary Condensed Consolidated Balance Sheets
(Unaudited, in thousands, except per share data)
September 28, 2018 | December 31, 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 61,654 | $ | 57,024 | |||
Accounts receivable, net | 77,986 | 69,844 | |||||
Inventories | 23,333 | 25,976 | |||||
Prepaid expenses and other current assets | 24,226 | 18,931 | |||||
Total current assets | 187,199 | 171,775 | |||||
Property and equipment, net | 24,151 | 29,265 | |||||
Goodwill | 241,512 | 242,827 | |||||
Intangibles, net | 14,938 | 21,279 | |||||
Other long-term assets | 38,624 | 42,913 | |||||
Total assets | $ | 506,424 | $ | 508,059 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Other debts and capital lease obligations, current | $ | 7,677 | $ | 7,610 | |||
Accounts payable | 29,354 | 33,112 | |||||
Income taxes payable | 830 | 233 | |||||
Deferred revenue | 48,679 | 52,429 | |||||
Accrued and other current liabilities | 50,734 | 48,705 | |||||
Total current liabilities | 137,274 | 142,089 | |||||
Convertible notes, long-term | 113,230 | 108,748 | |||||
Other debts and capital lease obligations, long-term | 13,155 | 15,336 | |||||
Income taxes payable, long-term | 747 | 917 | |||||
Other non-current liabilities | 18,989 | 22,626 | |||||
Total liabilities | 283,395 | 289,716 | |||||
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; 86,687 and 82,554 shares issued and outstanding at September 28, 2018 and December 31, 2017, respectively | 87 | 83 | |||||
Additional paid-in capital | 2,293,174 | 2,272,690 | |||||
Accumulated deficit | (2,070,746 | ) | (2,057,812 | ) | |||
Accumulated other comprehensive income | 514 | 3,382 | |||||
Total stockholders' equity | 223,029 | 218,343 | |||||
Total liabilities and stockholders' equity | $ | 506,424 | $ | 508,059 | |||
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Harmonic Inc.
Preliminary Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)
Three months ended | Nine months ended | ||||||||||||||
September 28, 2018 | September 29, 2017 | September 28, 2018 | September 29, 2017 | ||||||||||||
Revenue: | |||||||||||||||
Product | $ | 62,803 | $ | 58,161 | $ | 178,776 | $ | 158,657 | |||||||
Service | 37,813 | 33,853 | 111,127 | 98,615 | |||||||||||
Total net revenue | 100,616 | 92,014 | 289,903 | 257,272 | |||||||||||
Cost of revenue: | |||||||||||||||
Product | 33,224 | 27,736 | 91,084 | 85,843 | |||||||||||
Service | 17,290 | 17,253 | 49,931 | 50,181 | |||||||||||
Total cost of revenue | 50,514 | 44,989 | 141,015 | 136,024 | |||||||||||
Gross profit | 50,102 | 47,025 | 148,888 | 121,248 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 22,251 | 21,289 | 67,250 | 73,226 | |||||||||||
Selling, general and administrative | 29,723 | 37,121 | 88,874 | 104,377 | |||||||||||
Amortization of intangibles | 792 | 793 | 2,396 | 2,347 | |||||||||||
Restructuring and related charges | 987 | 2,028 | 2,704 | 4,084 | |||||||||||
Total operating expenses | 53,753 | 61,231 | 161,224 | 184,034 | |||||||||||
Loss from operations | (3,651 | ) | (14,206 | ) | (12,336 | ) | (62,786 | ) | |||||||
Interest expense, net | (2,872 | ) | (2,794 | ) | (8,492 | ) | (8,064 | ) | |||||||
Other expense, net | (365 | ) | (498 | ) | (698 | ) | (1,828 | ) | |||||||
Loss before income taxes | (6,888 | ) | (17,498 | ) | (21,526 | ) | (72,678 | ) | |||||||
Provision for (benefit from) income taxes | 870 | (1,915 | ) | 2,839 | (1,568 | ) | |||||||||
Net loss | $ | (7,758 | ) | $ | (15,583 | ) | $ | (24,365 | ) | $ | (71,110 | ) | |||
Net loss per share: | |||||||||||||||
Basic and diluted | $ | (0.09 | ) | $ | (0.19 | ) | $ | (0.29 | ) | $ | (0.88 | ) | |||
Shares used in per share calculation: | |||||||||||||||
Basic and diluted | 86,321 | 81,445 | 85,188 | 80,618 | |||||||||||
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Harmonic Inc.
Preliminary Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
Nine months ended | |||||||
September 28, 2018 | September 29, 2017 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (24,365 | ) | $ | (71,110 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Amortization of intangibles | 6,281 | 6,232 | |||||
Depreciation | 9,910 | 11,045 | |||||
Stock-based compensation | 14,202 | 11,107 | |||||
Amortization of discount on convertible debt | 4,482 | 4,060 | |||||
Amortization of non-cash warrant | 1,185 | 38 | |||||
Restructuring, asset impairment and loss on retirement of fixed assets | 1,105 | 565 | |||||
Deferred income taxes | 1,056 | — | |||||
Foreign currency adjustments | (1,034 | ) | 1,795 | ||||
Provision for excess and obsolete inventories | 1,259 | 5,578 | |||||
Allowance for doubtful accounts, returns and discounts | 1,357 | 4,309 | |||||
Other non-cash adjustments, net | 286 | 298 | |||||
Changes in operating assets and liabilities, net of effects of acquisition: | |||||||
Accounts receivable | (9,585 | ) | 11,367 | ||||
Inventories | 997 | 6,188 | |||||
Prepaid expenses and other assets | 2,507 | 6,702 | |||||
Accounts payable | (4,032 | ) | 2,129 | ||||
Deferred revenue | 1,783 | (1,098 | ) | ||||
Income taxes payable | 461 | (2,122 | ) | ||||
Accrued and other liabilities | (2,188 | ) | (3,053 | ) | |||
Net cash provided by (used in) operating activities | 5,667 | (5,970 | ) | ||||
Cash flows from investing activities: | |||||||
Proceeds from maturities of investments | — | 3,106 | |||||
Proceeds from sale of investments | 104 | 3,792 | |||||
Purchases of property and equipment | (4,703 | ) | (9,075 | ) | |||
Net cash used in investing activities | (4,599 | ) | (2,177 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from other debts and capital leases | 5,066 | 6,344 | |||||
Repayment of other debts and capital leases | (6,568 | ) | (7,008 | ) | |||
Proceeds from common stock issued to employees | 4,299 | 4,697 | |||||
Payment of tax withholding obligations related to net share settlements of restricted stock units | (166 | ) | (2,757 | ) | |||
Net cash provided by financing activities | 2,631 | 1,276 | |||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (580 | ) | 1,471 | ||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 3,119 | (5,400 | ) | ||||
Cash, cash equivalents and restricted cash at beginning of period | 58,757 | 57,420 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 61,876 | $ | 52,020 | |||
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets | |||||||
Cash and cash equivalents | $ | 61,654 | $ | 50,039 | |||
Restricted cash included in prepaid expenses and other current assets | 222 | 803 | |||||
Restricted cash included in other long-term assets | — | 1,178 | |||||
Total cash, cash equivalents and restricted cash | $ | 61,876 | $ | 52,020 | |||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Harmonic Inc.
Preliminary Revenue Information
(Unaudited, in thousands, except percentages)
Three months ended | ||||||||||||||||||||||||||||||||
September 28, 2018 | June 29, 2018 | September 29, 2017 | ||||||||||||||||||||||||||||||
GAAP | Adjustments(1) | Non-GAAP | GAAP | Adjustments(1) | Non-GAAP | GAAP | Adjustments(1) | Non-GAAP | ||||||||||||||||||||||||
Product | ||||||||||||||||||||||||||||||||
Video Products | $ | 45,781 | $ | — | $ | 45,781 | 45% | $ | 50,441 | $ | — | $ | 50,441 | 51% | $ | 54,175 | $ | — | $ | 54,175 | 59% | |||||||||||
Cable Access | 17,022 | 518 | 17,540 | 17% | 10,159 | 117 | 10,276 | 10% | 3,986 | $ | (163 | ) | 3,823 | 4% | ||||||||||||||||||
Services and Support | 37,813 | 272 | 38,085 | 38% | 38,560 | 167 | 38,727 | 39% | 33,853 | (215 | ) | 33,638 | 37% | |||||||||||||||||||
Total | $ | 100,616 | $ | 790 | $ | 101,406 | 100% | $ | 99,160 | $ | 284 | $ | 99,444 | 100% | $ | 92,014 | $ | (378 | ) | $ | 91,636 | 100% | ||||||||||
Geography | ||||||||||||||||||||||||||||||||
Americas | $ | 54,119 | $ | 790 | $ | 54,909 | 54% | $ | 52,918 | $ | 284 | $ | 53,202 | 53% | $ | 48,656 | $ | (378 | ) | $ | 48,278 | 53% | ||||||||||
EMEA | 26,316 | — | 26,316 | 26% | 31,676 | — | 31,676 | 32% | 27,528 | — | 27,528 | 30% | ||||||||||||||||||||
APAC | 20,181 | — | 20,181 | 20% | 14,566 | — | 14,566 | 15% | 15,830 | — | 15,830 | 17% | ||||||||||||||||||||
Total | $ | 100,616 | $ | 790 | $ | 101,406 | 100% | $ | 99,160 | $ | 284 | $ | 99,444 | 100% | $ | 92,014 | $ | (378 | ) | $ | 91,636 | 100% | ||||||||||
Market | ||||||||||||||||||||||||||||||||
Service Provider | $ | 66,737 | $ | 790 | $ | 67,527 | 67% | $ | 54,142 | $ | 284 | $ | 54,426 | 55% | $ | 50,410 | $ | (378 | ) | $ | 50,032 | 55% | ||||||||||
Broadcast and Media | 33,879 | — | 33,879 | 33% | 45,018 | — | 45,018 | 45% | 41,604 | — | 41,604 | 45% | ||||||||||||||||||||
Total | $ | 100,616 | $ | 790 | $ | 101,406 | 100% | $ | 99,160 | $ | 284 | $ | 99,444 | 100% | $ | 92,014 | $ | (378 | ) | $ | 91,636 | 100% | ||||||||||
Nine months ended | ||||||||||||||||||||||
September 28, 2018 | September 29, 2017 | |||||||||||||||||||||
GAAP | Adjustments(1) | Non-GAAP | GAAP | Adjustments(1) | Non-GAAP | |||||||||||||||||
Product | ||||||||||||||||||||||
Video Products | $ | 143,634 | $ | — | $ | 143,634 | 49% | $ | 144,419 | $ | — | $ | 144,419 | 56% | ||||||||
Cable Access | 35,143 | 702 | 35,845 | 12% | 14,238 | 28 | 14,266 | 6% | ||||||||||||||
Services and Support | 111,126 | 483 | 111,609 | 39% | 98,615 | 121 | 98,736 | 38% | ||||||||||||||
Total | $ | 289,903 | $ | 1,185 | $ | 291,088 | 100% | $ | 257,272 | $ | 149 | $ | 257,421 | 100% | ||||||||
Geography | ||||||||||||||||||||||
Americas | $ | 155,893 | $ | 1,185 | $ | 157,078 | 54% | $ | 127,173 | $ | 38 | $ | 127,211 | 49% | ||||||||
EMEA | 81,194 | — | 81,194 | 28% | 77,920 | 111 | 78,031 | 30% | ||||||||||||||
APAC | 52,816 | — | 52,816 | 18% | 52,179 | — | 52,179 | 21% | ||||||||||||||
Total | $ | 289,903 | $ | 1,185 | $ | 291,088 | 100% | $ | 257,272 | $ | 149 | $ | 257,421 | 100% | ||||||||
Market | ||||||||||||||||||||||
Service Provider | $ | 173,096 | $ | 1,185 | $ | 174,281 | 60% | $ | 144,858 | $ | 38 | $ | 144,896 | 56% | ||||||||
Broadcast and Media | 116,807 | — | 116,807 | 40% | 112,414 | 111 | 112,525 | 44% | ||||||||||||||
Total | $ | 289,903 | $ | 1,185 | $ | 291,088 | 100% | $ | 257,272 | $ | 149 | $ | 257,421 | 100% | ||||||||
(1) See “Use of Non-GAAP Financial Measures” above and “GAAP to Non-GAAP Reconciliations” below.
9
Harmonic Inc.
Preliminary Segment Information
(Unaudited, in thousands, except percentages)
Three months ended September 28, 2018 | |||||||||||||||||||
Video | Cable Access | Total Segment Measures (non-GAAP) | Adjustments (1) | Consolidated GAAP Measures | |||||||||||||||
Net revenue | $ | 73,344 | $ | 28,062 | $ | 101,406 | $ | (790 | ) | * | $ | 100,616 | |||||||
Gross profit | 41,937 | 10,871 | 52,808 | (2,706 | ) | 50,102 | |||||||||||||
Gross margin% | 57.2 | % | 38.7 | % | 52.1 | % | 49.8 | % | |||||||||||
Operating income (loss) | 5,258 | 395 | 5,653 | (9,304 | ) | (3,651 | ) | ||||||||||||
Operating margin% | 7.2 | % | 1.4 | % | 5.6 | % | (3.6 | )% | |||||||||||
Three months ended June 29, 2018 | |||||||||||||||||||
Video | Cable Access | Total Segment Measures (non-GAAP) | Adjustments (1) | Consolidated GAAP Measures | |||||||||||||||
Net revenue | $ | 79,208 | $ | 20,236 | $ | 99,444 | $ | (284 | ) | * | $ | 99,160 | |||||||
Gross profit | 43,558 | 10,187 | 53,745 | (2,142 | ) | 51,603 | |||||||||||||
Gross margin% | 55.0 | % | 50.3 | % | 54.0 | % | 52.0 | % | |||||||||||
Operating income | 6,239 | 540 | 6,779 | (6,137 | ) | 642 | |||||||||||||
Operating margin% | 7.9 | % | 2.7 | % | 6.8 | % | 0.6 | % | |||||||||||
Three months ended September 29, 2017 | |||||||||||||||||||
Video | Cable Access | Total Segment Measures (non-GAAP) | Adjustments (1) | Consolidated GAAP Measures | |||||||||||||||
Net revenue | $ | 84,155 | $ | 7,481 | $ | 91,636 | $ | 378 | * | $ | 92,014 | ||||||||
Gross profit | 48,283 | 686 | 48,969 | (1,944 | ) | 47,025 | |||||||||||||
Gross margin% | 57.4 | % | 9.2 | % | 53.4 | % | 51.1 | % | |||||||||||
Operating income (loss) | 7,009 | (5,735 | ) | 1,274 | (15,480 | ) | (14,206 | ) | |||||||||||
Operating margin% | 8.3 | % | (76.7 | )% | 1.4 | % | (15.4 | )% | |||||||||||
Nine months ended September 28, 2018 | |||||||||||||||||||
Video | Cable Access | Total Segment Measures (non-GAAP) | Adjustments (1) | Consolidated GAAP Measures | |||||||||||||||
Net revenue | $ | 224,300 | $ | 66,788 | $ | 291,088 | $ | (1,185 | ) | * | $ | 289,903 | |||||||
Gross profit | 126,721 | 29,698 | 156,419 | (7,531 | ) | 148,888 | |||||||||||||
Gross margin% | 56.5 | % | 44.5 | % | 53.7 | % | 51.4 | % | |||||||||||
Operating income (loss) | 13,492 | (578 | ) | 12,914 | (25,250 | ) | (12,336 | ) | |||||||||||
Operating margin% | 6.0 | % | (0.9 | )% | 4.4 | % | (4.3 | )% | |||||||||||
Nine months ended September 29, 2017 | |||||||||||||||||||
Video | Cable Access | Total Segment Measures (non-GAAP) | Adjustments (1) | Consolidated GAAP Measures | |||||||||||||||
Net revenue | $ | 231,987 | $ | 25,434 | $ | 257,421 | $ | (149 | ) | * | $ | 257,272 | |||||||
Gross profit | 126,887 | 5,011 | 131,898 | (10,650 | ) | 121,248 | |||||||||||||
Gross margin% | 54.7 | % | 19.7 | % | 51.2 | % | 47.1 | % | |||||||||||
Operating loss | (7,663 | ) | (18,810 | ) | (26,473 | ) | (36,313 | ) | (62,786 | ) | |||||||||
Operating margin% | (3.3 | )% | (74.0 | )% | (10.3 | )% | (24.4 | )% | |||||||||||
(1) See “Use of Non-GAAP Financial Measures” above and “GAAP to Non-GAAP Reconciliations” below.
* These non-GAAP adjustments are for warrant amortization for the respective periods and relate to our Cable Access segment. After applying these adjustments to the non-GAAP revenue for the Cable Access segment, our GAAP revenue for the Cable Access segment for the three and nine months ended September 28, 2018 was $27,272 and $65,603, respectively; the GAAP revenue for the three and nine months ended September 29, 2017 was $7,859 and $25,285, respectively; and the GAAP revenue for the three months ended June 29, 2018 was $19,952.
10
Harmonic Inc.
GAAP to Non-GAAP Reconciliations (Unaudited)
(In thousands, except percentages and per share data)
Three months ended September 28, 2018 | ||||||||||||||||||
Revenue | Gross Profit | Total Operating Expense | Income from Operations | Total Non-operating Expense, net | Net Income (Loss) | |||||||||||||
GAAP | $ | 100,616 | $ | 50,102 | $ | 53,753 | $ | (3,651 | ) | $ | (3,237 | ) | $ | (7,758 | ) | |||
Accounting impact related to warrant amortization | 790 | 790 | — | 790 | — | 790 | ||||||||||||
Stock-based compensation | — | 614 | (4,819 | ) | 5,433 | — | 5,433 | |||||||||||
Amortization of intangibles | — | 1,295 | (792 | ) | 2,087 | — | 2,087 | |||||||||||
Restructuring and related charges | — | 7 | (987 | ) | 994 | — | 994 | |||||||||||
Loss on equity investments | — | — | — | — | 72 | 72 | ||||||||||||
Non-cash interest expenses related to convertible notes | — | — | — | — | 1,528 | 1,528 | ||||||||||||
Discrete tax items and tax effect of non-GAAP adjustments | — | — | — | — | — | 227 | ||||||||||||
Total adjustments | 790 | 2,706 | (6,598 | ) | 9,304 | 1,600 | 11,131 | |||||||||||
Non-GAAP | $ | 101,406 | $ | 52,808 | $ | 47,155 | $ | 5,653 | $ | (1,637 | ) | $ | 3,373 | |||||
As a % of revenue (GAAP) | 49.8 | % | 53.4 | % | (3.6 | )% | (3.2 | )% | (7.7 | )% | ||||||||
As a % of revenue (Non-GAAP) | 52.1 | % | 46.5 | % | 5.6 | % | (1.6 | )% | 3.3 | % | ||||||||
Diluted net income (loss) per share: | ||||||||||||||||||
Diluted net loss per share-GAAP | $ | (0.09 | ) | |||||||||||||||
Diluted net income per share-Non-GAAP | $ | 0.04 | ||||||||||||||||
Shares used to compute diluted net income (loss) per share: | ||||||||||||||||||
GAAP | 86,321 | |||||||||||||||||
Non-GAAP | 87,770 | |||||||||||||||||
Three months ended June 29, 2018 | ||||||||||||||||||
Revenue | Gross Profit | Total Operating Expense | Income from Operations | Total Non-operating Expense, net | Net Income (Loss) | |||||||||||||
GAAP | $ | 99,160 | $ | 51,603 | $ | 50,961 | $ | 642 | $ | (2,664 | ) | $ | (2,913 | ) | ||||
Accounting impact related to warrant amortization | 284 | 284 | — | 284 | — | 284 | ||||||||||||
Stock-based compensation | — | 448 | (2,564 | ) | 3,012 | — | 3,012 | |||||||||||
Amortization of intangibles | — | 1,295 | (800 | ) | 2,095 | — | 2,095 | |||||||||||
Restructuring and related charges | — | 115 | (631 | ) | 746 | — | 746 | |||||||||||
Gain on equity investment | — | — | — | — | (183 | ) | (183 | ) | ||||||||||
Non-cash interest expenses related to convertible notes | — | — | — | — | 1,501 | 1,501 | ||||||||||||
Discrete tax items and tax effect of non-GAAP adjustments | — | — | — | — | — | 22 | ||||||||||||
Total adjustments | 284 | 2,142 | (3,995 | ) | 6,137 | 1,318 | 7,477 | |||||||||||
Non-GAAP | $ | 99,444 | $ | 53,745 | $ | 46,966 | $ | 6,779 | $ | (1,346 | ) | $ | 4,564 | |||||
As a % of revenue (GAAP) | 52.0 | % | 51.4 | % | 0.6 | % | (2.7 | )% | (2.9 | )% | ||||||||
As a % of revenue (Non-GAAP) | 54.0 | % | 47.2 | % | 6.8 | % | (1.4 | )% | 4.6 | % | ||||||||
Diluted net income (loss) per share: | ||||||||||||||||||
Diluted net loss per share-GAAP | $ | (0.03 | ) | |||||||||||||||
Diluted net income per share-Non-GAAP | $ | 0.05 | ||||||||||||||||
Shares used to compute diluted net income (loss) per share: | ||||||||||||||||||
GAAP | 85,304 | |||||||||||||||||
Non-GAAP | 85,758 | |||||||||||||||||
11
Three months ended September 29, 2017 | ||||||||||||||||||
Revenue | Gross Profit | Total Operating Expense | Income (Loss) from Operations | Total Non-operating Expense, net | Net Loss | |||||||||||||
GAAP | $ | 92,014 | $ | 47,025 | $ | 61,231 | $ | (14,206 | ) | $ | (3,292 | ) | $ | (15,583 | ) | |||
Accounting impact related to warrant amortization | (378 | ) | (378 | ) | — | (378 | ) | — | (378 | ) | ||||||||
Stock-based compensation | — | 478 | (3,242 | ) | 3,720 | — | 3,720 | |||||||||||
Amortization of intangibles | — | 1,295 | (793 | ) | 2,088 | — | 2,088 | |||||||||||
Restructuring and related charges | — | 549 | (2,028 | ) | 2,577 | — | 2,577 | |||||||||||
TVN acquisition-and integration-related costs | — | — | (117 | ) | 117 | — | 117 | |||||||||||
Avid litigation settlement and associated legal fees | — | — | (7,356 | ) | 7,356 | — | 7,356 | |||||||||||
Non-cash interest expenses related to convertible notes | — | — | — | — | 1,384 | 1,384 | ||||||||||||
Discrete tax items and tax effect of non-GAAP adjustments | — | — | — | — | — | (1,820 | ) | |||||||||||
Total adjustments | $ | (378 | ) | $ | 1,944 | $ | (13,536 | ) | $ | 15,480 | $ | 1,384 | $ | 15,044 | ||||
Non-GAAP | $ | 91,636 | $ | 48,969 | $ | 47,695 | $ | 1,274 | $ | (1,908 | ) | $ | (539 | ) | ||||
As a % of revenue (GAAP) | 51.1 | % | 66.5 | % | (15.4 | )% | (3.6 | )% | (16.9 | )% | ||||||||
As a % of revenue (Non-GAAP) | 53.4 | % | 52.0 | % | 1.4 | % | (2.1 | )% | (0.6 | )% | ||||||||
Diluted net loss per share: | ||||||||||||||||||
Diluted net loss per share-GAAP | $ | (0.19 | ) | |||||||||||||||
Diluted net loss per share-Non-GAAP | $ | (0.01 | ) | |||||||||||||||
Shares used to compute diluted net loss per share: | ||||||||||||||||||
GAAP and Non-GAAP | 81,445 | |||||||||||||||||
Nine months ended September 28, 2018 | ||||||||||||||||||
Revenue | Gross Profit | Total Operating Expense | Income (Loss) from Operations | Total Non-operating Expense, net | Net Income (Loss) | |||||||||||||
GAAP | $ | 289,903 | $ | 148,888 | $ | 161,224 | $ | (12,336 | ) | $ | (9,190 | ) | $ | (24,365 | ) | |||
Accounting impact related to warrant amortization | 1,185 | 1,185 | — | 1,185 | — | 1,185 | ||||||||||||
Stock-based compensation | — | 1,577 | (12,625 | ) | 14,202 | — | 14,202 | |||||||||||
Amortization of intangibles | — | 3,885 | (2,396 | ) | 6,281 | — | 6,281 | |||||||||||
Restructuring and related charges | — | 884 | (2,704 | ) | 3,588 | — | 3,588 | |||||||||||
Gain on equity investments | — | — | — | — | (111 | ) | (111 | ) | ||||||||||
Non-cash interest expenses related to convertible notes | — | — | — | — | 4,483 | 4,483 | ||||||||||||
Avid litigation settlement and associated legal fees | — | — | 6 | (6 | ) | — | (6 | ) | ||||||||||
Discrete tax items and tax effect of non-GAAP adjustments | — | — | — | — | — | 1,543 | ||||||||||||
Total adjustments | $ | 1,185 | $ | 7,531 | $ | (17,719 | ) | $ | 25,250 | $ | 4,372 | $ | 31,165 | |||||
Non-GAAP | $ | 291,088 | $ | 156,419 | $ | 143,505 | $ | 12,914 | $ | (4,818 | ) | $ | 6,800 | |||||
As a % of revenue (GAAP) | 51.4 | % | 55.6 | % | (4.3 | )% | (3.2 | )% | (8.4 | )% | ||||||||
As a % of revenue (Non-GAAP) | 53.7 | % | 49.3 | % | 4.4 | % | (1.7 | )% | 2.3 | % | ||||||||
Diluted net income (loss) per share: | ||||||||||||||||||
Diluted net loss per share-GAAP | $ | (0.29 | ) | |||||||||||||||
Diluted net income per share-Non-GAAP | $ | 0.08 | ||||||||||||||||
Shares used to compute diluted net income (loss) per share: | ||||||||||||||||||
GAAP | 85,188 | |||||||||||||||||
Non-GAAP | 85,962 | |||||||||||||||||
12
Nine months ended September 29, 2017 | ||||||||||||||||||
Revenue | Gross Profit | Total Operating Expense | Loss from Operations | Total Non-operating Expense, net | Net Loss | |||||||||||||
GAAP | $ | 257,272 | $ | 121,248 | $ | 184,034 | $ | (62,786 | ) | $ | (9,892 | ) | $ | (71,110 | ) | |||
Cable Edge inventory charge | — | 3,316 | — | 3,316 | — | 3,316 | ||||||||||||
Acquisition accounting impacts related to TVN deferred revenue | 111 | 111 | — | 111 | — | 111 | ||||||||||||
Accounting impact related to warrant amortization | 38 | 38 | — | 38 | — | 38 | ||||||||||||
Stock-based compensation | — | 1,623 | (9,484 | ) | 11,107 | — | 11,107 | |||||||||||
Amortization of intangibles | — | 3,885 | (2,347 | ) | 6,232 | — | 6,232 | |||||||||||
Restructuring and related charges | — | 1,335 | (4,084 | ) | 5,419 | — | 5,419 | |||||||||||
TVN acquisition-and integration-related costs | — | 342 | (2,392 | ) | 2,734 | — | 2,734 | |||||||||||
Avid litigation settlement and associated legal fees | — | — | (7,356 | ) | 7,356 | — | 7,356 | |||||||||||
Non-cash interest expenses related to convertible notes | — | — | — | — | 4,060 | 4,060 | ||||||||||||
Discrete tax items and tax effect of non-GAAP adjustments | — | — | — | — | — | 3,278 | ||||||||||||
Total adjustments | 149 | 10,650 | (25,663 | ) | 36,313 | 4,060 | 43,651 | |||||||||||
Non-GAAP | $ | 257,421 | $ | 131,898 | $ | 158,371 | $ | (26,473 | ) | $ | (5,832 | ) | $ | (27,459 | ) | |||
As a % of revenue (GAAP) | 47.1 | % | 71.5 | % | (24.4 | )% | (3.8 | )% | (27.6 | )% | ||||||||
As a % of revenue (Non-GAAP) | 51.2 | % | 61.5 | % | (10.3 | )% | (2.3 | )% | (10.7 | )% | ||||||||
Diluted net loss per share: | ||||||||||||||||||
Diluted net loss per share-GAAP | $ | (0.88 | ) | |||||||||||||||
Diluted net loss per share-Non-GAAP | $ | (0.34 | ) | |||||||||||||||
Shares used to compute diluted net loss per share: | ||||||||||||||||||
GAAP and Non-GAAP | 80,618 | |||||||||||||||||
13
Harmonic Inc.
GAAP to Non-GAAP Reconciliations on Financial Guidance
(In millions, except percentages and per share data)
Q4 2018 Financial Guidance | ||||||
Revenue | Gross Profit | Total Operating Expense | Income (Loss) from Operations | Total Non-operating Expense, net | Net Income (Loss) | |
GAAP | $104.7 to $117.7 | $50.3 to $56.7 | $52.5 to $53.5 | $(3.2) to $4.2 | $(3.2) | $(6.9) to $0.5 |
Accounting impact related to warrant amortization | 0.3 | 0.3 | — | 0.3 | — | 0.3 |
Stock-based compensation | — | 0.3 | (2.7) | 3.0 | — | 3.0 |
Amortization of intangibles | — | 1.3 | (0.8) | 2.1 | — | 2.1 |
Non-cash interest expense related to convertible notes | — | — | — | — | 1.6 | 1.6 |
Tax effect of non-GAAP adjustments | — | — | — | — | — | $(0.8) to 0.4 |
Total adjustments | 0.3 | 1.9 | (3.5) | 5.4 | 1.6 | $6.2 to $7.4 |
Non-GAAP | $105.0 to $118.0 | $52.2 to $58.6 | $49.0 to $50.0 | $2.2 to $9.6 | $(1.6) | $0.5 to $6.7 |
As a % of revenue (GAAP) | 48.0% to 48.5% | 44.6% to 51.1% | (3.1)% to 3.6% | (3.0)% | (6.6)% to 0.4% | |
As a % of revenue (Non-GAAP) | 49.0% to 50.0% | 41.5% to 47.6% | 2.1% to 8.1% | (1.5)% | 0.5% to 5.7% | |
Diluted net income (loss) per share: | ||||||
Diluted net loss per share-GAAP | $(0.08) to $0.01 | |||||
Diluted net income per share-Non-GAAP | $0.01 to $0.07 | |||||
Shares used to compute diluted net loss per share: | ||||||
GAAP | 86.8 | |||||
Shares used to compute diluted net income per share: | ||||||
GAAP and Non-GAAP | 89.2 | |||||
14
2018 Financial Guidance | ||||||
Revenue | Gross Profit | Total Operating Expense | Income (Loss) from Operations | Total Non-operating Expense, net | Net Income (Loss) | |
GAAP | $394.5 to $407.5 | $199.1 to $205.5 | $213.7 to $214.7 | $(15.6) to $(8.2) | $(12.3) | $(31.2) to $(23.8) |
Accounting impact related to warrant amortization | 1.5 | 1.5 | — | 1.5 | — | 1.5 |
Stock-based compensation | — | 1.9 | (15.3) | 17.2 | — | 17.2 |
Amortization of intangibles | — | 5.2 | (3.2) | 8.4 | — | 8.4 |
Restructuring and related charges | — | 0.9 | (2.7) | 3.6 | — | 3.6 |
Non-cash interest expense related to convertible notes | — | — | — | — | 6.1 | 6.1 |
Gain on equity investment | — | — | — | — | (0.1) | (0.1) |
Tax effect of non-GAAP adjustments | — | — | — | — | — | $0.7 to 1.9 |
Total adjustments | 1.5 | 9.5 | (21.2) | 30.7 | 6.0 | $37.4 to $38.6 |
Non-GAAP | $396.0 to $409.0 | $208.6 to $215.0 | $192.5 to $193.5 | $15.1 to $22.5 | $(6.3) | $7.4 to $13.6 |
As a % of revenue (GAAP) | 50.0% to 50.5% | 52.4% to 54.4% | (4.0)% to (2.0)% | (3.0)% | (7.9)% to (5.8)% | |
As a % of revenue (Non-GAAP) | 52.5% to 53.0% | 47.1% to 48.9% | 3.8% to 5.5% | (1.5)% | 1.9% to 3.3% | |
Diluted net income (loss) per share: | ||||||
Diluted net loss per share-GAAP | $(0.36) to $(0.28) | |||||
Diluted net income per share-Non-GAAP | $0.09 to $0.16 | |||||
Shares used to compute diluted net loss per share: | ||||||
GAAP | 85.7 | |||||
Shares used to compute diluted net income per share: | ||||||
Non-GAAP | 86.9 | |||||
15