Attached files
| file | filename |
|---|---|
| EX-99.2 - EXHIBIT 99.2 - HARMONIC INC | hlit-20151027xex992newcfo.htm |
| EX-10.2 - EXHIBIT 10.2 - HARMONIC INC | hlit-20151027xex102cocharo.htm |
| EX-3.2 - EXHIBIT 3.2 - HARMONIC INC | hlit-20151027xex32bylaw.htm |
| EX-10.1 - EXHIBIT 10.1 - HARMONIC INC | hlit-20151027xex101cfooffe.htm |
| 8-K - 8-K - HARMONIC INC | hlit-201510028xkerxq315cfo.htm |
Exhibit 99.1
 |  |
FOR IMMEDIATE RELEASE
Harmonic Announces Third Quarter 2015 Results
SAN JOSE, Calif.-October 27, 2015-Harmonic Inc. (NASDAQ: HLIT), the worldwide leader in video delivery infrastructure, announced today its preliminary and unaudited results for the third quarter of 2015.
Net revenue for the third quarter of 2015 was $83.3 million, compared with $103.1 million for the second quarter of 2015 and $108.1 million for the third quarter of 2014.
Bookings for the third quarter of 2015 were $74.6 million, compared with $99.3 million for the second quarter of 2015 and $97.8 million for the third quarter of 2014.
Total backlog and deferred revenue was $110.8 million as of October 2, 2015, compared to $120.6 million as of July 3, 2015.
GAAP net loss for the third quarter of 2015 was $(4.8) million, or $(0.05) per diluted share, compared with a GAAP net loss for the second quarter of 2015 of $(1.0) million, or $(0.01) per diluted share, and a GAAP net income of $1.1 million, or $0.01 per diluted share, for the third quarter of 2014.
Non-GAAP net loss for the third quarter of 2015 was $(0.2) million, or $0.00 per diluted share, compared with a non-GAAP net income for the second quarter of 2015 of $4.2 million, or $0.05 per diluted share, and a non-GAAP net income of $5.1 million, or $0.06 per diluted share, for the third quarter of 2014. See “Use of Non-GAAP Financial Measures” and “GAAP to Non-GAAP Reconciliations” below.
GAAP gross margin was 55.5% and GAAP operating margin was (7.5)% for the third quarter of 2015, compared with 52.7% and (0.3)%, respectively, for the second quarter of 2015, and 49.4% and (3.3)%, respectively, for the same period in 2014.
Non-GAAP gross margin was 56.3% and non-GAAP operating margin was (0.5)% for the third quarter of 2015, compared with 53.2% and 5.1%, respectively, for the second quarter of 2015, and 53.6% and 6.2%, respectively, for the same period in 2014. See “Use of Non-GAAP Financial Measures” and “GAAP to Non-GAAP Reconciliations” below.
Total cash, cash equivalents and short-term investments were $87.6 million at the end of the third quarter of 2015, down $17.5 million from $105.1 million at the end of the prior quarter. In the third quarter of 2015, the Company used approximately $5.0 million of cash from operations, and used approximately $7.8 million to repurchase approximately 1.3 million shares of common stock under its share repurchase program.
Business Outlook
For the fourth quarter of 2015, Harmonic anticipates:
•Net revenue in the range of $78 million to $88 million
•GAAP gross margins in the range of 53% to 54%
•GAAP operating expenses in the range of $52 million to $53 million
•Non-GAAP gross margins in the range of 54% to 55%
•Non-GAAP operating expenses in the range of $46 million to $47 million
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. Pacific (5:00 p.m. Eastern) on Tuesday, October 27, 2015. A listen-only broadcast of the conference call can be accessed either from the Company's website at www.harmonicinc.com or by calling +1.847.619.6397 or +1.800.708.4540 (passcode 40861736). A replay of the conference call will be available after 4:30 p.m. Pacific at the same website address or by calling +1.630.652.3042 or +1.888.843.7419 (passcode 40861736#).
About Harmonic Inc.
Harmonic (NASDAQ: HLIT) is the worldwide leader in video delivery infrastructure for emerging television and video services. Harmonic enables customers to produce, deliver, and monetize amazing video experiences, with unequalled business agility and operational efficiency, by providing market-leading innovation, high-quality service, and compelling total-cost-of-ownership. 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: our final results for the third quarter ended October 2, 2015 and our expectations concerning quarter-on-quarter growth; and net revenue, GAAP gross margins, GAAP operating expenses, non-GAAP gross margins and non-GAAP operating expenses for the fourth quarter of 2015. 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; a strong U.S. dollar may have a negative impact on our business in certain international markets; 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 and telco and 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, including in Ukraine; risks associated with our CCAP and VOS™ product initiatives, 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; the effect on our business of natural disasters; and the risk that our share repurchase program will not continue to result in material purchases of our common stock. 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 Quarterly Report on Form 10-Q for the quarterly period ended July 3, 2015 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
In establishing operating budgets, managing its business performance, and setting internal measurement targets, we exclude 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 profit, operating expenses, income (loss) from operations and 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. These adjustments are restructuring and related charges, impairment of long-term investment and non-cash items, such as stock-based compensation expense, amortization of intangibles, and adjustments that normalize the tax rate. With respect to our expectations under “Business Outlook” above, reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available without unreasonable efforts on a forward-looking basis due to the high variability and low visibility with respect to the charges which are excluded from these non-GAAP measures. The effects of stock-based compensation expense specific to common stock options are directly impacted by unpredictable fluctuations in our stock price. We expect the variability of the above charges to have a significant impact on our GAAP financial results.
CONTACTS:
Harold Covert | Blair King |
Chief Financial Officer | Director, Investor Relations |
Harmonic Inc. | Harmonic Inc. |
+1.408.542.2500 | +1.408.490.6172 |
Harmonic Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
October 2, 2015 | December 31, 2014 | ||||||
(In thousands, except par value amounts) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 61,571 | $ | 73,032 | |||
Short-term investments | 25,990 | 31,847 | |||||
Accounts receivable, net | 64,128 | 74,144 | |||||
Inventories | 39,873 | 32,747 | |||||
Deferred income taxes, short-term | 3,375 | 3,375 | |||||
Prepaid expenses and other current assets | 31,709 | 17,539 | |||||
Total current assets | 226,646 | 232,684 | |||||
Property and equipment, net | 26,619 | 27,221 | |||||
Goodwill, intangibles and other assets | 213,643 | 220,613 | |||||
Total assets | $ | 466,908 | $ | 480,518 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 16,626 | $ | 15,318 | |||
Income taxes payable | 176 | 893 | |||||
Deferred revenue | 43,350 | 38,601 | |||||
Accrued liabilities | 29,139 | 35,118 | |||||
Total current liabilities | 89,291 | 89,930 | |||||
Income taxes payable, long-term | 4,296 | 4,969 | |||||
Deferred tax liabilities, long-term | 3,095 | 3,095 | |||||
Other non-current liabilities | 10,358 | 10,711 | |||||
Total liabilities | 107,040 | 108,705 | |||||
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; 87,477 and 87,700 shares issued and outstanding at October 2, 2015 and December 31, 2014, respectively | 87 | 88 | |||||
Additional paid-in capital | 2,259,757 | 2,261,952 | |||||
Accumulated deficit | (1,896,709 | ) | (1,888,247 | ) | |||
Accumulated other comprehensive loss | (3,267 | ) | (1,980 | ) | |||
Total stockholders' equity | 359,868 | 371,813 | |||||
Total liabilities and stockholders' equity | $ | 466,908 | $ | 480,518 | |||
Harmonic Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three months ended | Nine months ended | ||||||||||||||
October 2, 2015 | September 26, 2014 | October 2, 2015 | September 26, 2014 | ||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
Net revenue | $ | 83,305 | $ | 108,061 | $ | 290,424 | $ | 325,682 | |||||||
Cost of revenue | 37,074 | 54,633 | 134,780 | 170,125 | |||||||||||
Gross profit | 46,231 | 53,428 | 155,644 | 155,557 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 21,679 | 22,803 | 65,824 | 70,176 | |||||||||||
Selling, general and administrative | 28,966 | 32,114 | 91,443 | 98,640 | |||||||||||
Amortization of intangibles | 1,446 | 1,661 | 4,338 | 5,329 | |||||||||||
Restructuring and related charges | 397 | 388 | 626 | 821 | |||||||||||
Total operating expenses | 52,488 | 56,966 | 162,231 | 174,966 | |||||||||||
Loss from operations | (6,257 | ) | (3,538 | ) | (6,587 | ) | (19,409 | ) | |||||||
Interest and other income (expense), net | 178 | (214 | ) | (197 | ) | (185 | ) | ||||||||
Loss on impairment of long-term investment | — | — | (2,505 | ) | — | ||||||||||
Loss before income taxes | (6,079 | ) | (3,752 | ) | (9,289 | ) | (19,594 | ) | |||||||
(Benefit from) provision for income taxes | (1,268 | ) | (4,830 | ) | (827 | ) | 21,800 | ||||||||
Net income (loss) | $ | (4,811 | ) | $ | 1,078 | $ | (8,462 | ) | $ | (41,394 | ) | ||||
Net income (loss) per share: | |||||||||||||||
Basic | $ | (0.05 | ) | $ | 0.01 | $ | (0.10 | ) | $ | (0.44 | ) | ||||
Diluted | $ | (0.05 | ) | $ | 0.01 | $ | (0.10 | ) | $ | (0.44 | ) | ||||
Shares used in per share calculation: | |||||||||||||||
Basic | 87,991 | 90,618 | 88,359 | 94,113 | |||||||||||
Diluted | 87,991 | 91,800 | 88,359 | 94,113 | |||||||||||
Harmonic Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine months ended | |||||||
October 2, 2015 | September 26, 2014 | ||||||
(In thousands) | |||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (8,462 | ) | $ | (41,394 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Amortization of intangibles | 4,971 | 18,378 | |||||
Depreciation | 10,143 | 12,641 | |||||
Stock-based compensation | 11,845 | 12,720 | |||||
Loss on impairment of long-term investment | 2,505 | — | |||||
Deferred income taxes | — | 31,782 | |||||
Provision for excess and obsolete inventories | 1,234 | 2,013 | |||||
Allowance for doubtful accounts, returns and discounts | 576 | (116 | ) | ||||
Excess tax benefits from stock-based compensation | — | (194 | ) | ||||
Other non-cash adjustments, net | 354 | 1,108 | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable | 9,440 | (472 | ) | ||||
Inventories | (7,936 | ) | 2,401 | ||||
Prepaid expenses and other assets | (13,817 | ) | (5,321 | ) | |||
Accounts payable | 1,772 | (786 | ) | ||||
Deferred revenue | 5,237 | 7,770 | |||||
Income taxes payable | (1,372 | ) | (8,292 | ) | |||
Accrued and other liabilities | (7,926 | ) | (4,717 | ) | |||
Net cash provided by operating activities | 8,564 | 27,521 | |||||
Cash flows from investing activities: | |||||||
Purchases of investments | (20,714 | ) | (26,599 | ) | |||
Proceeds from sales and maturities of investments | 26,534 | 50,644 | |||||
Purchases of property and equipment | (10,393 | ) | (8,859 | ) | |||
Purchases of long-term investments | (85 | ) | (5,867 | ) | |||
Restricted cash | (1,091 | ) | — | ||||
Net cash (used in) provided by investing activities | (5,749 | ) | 9,319 | ||||
Cash flows from financing activities: | |||||||
Payments for repurchase of common stock | (20,007 | ) | (86,407 | ) | |||
Net proceeds from common stock issued to employees | 5,967 | 1,241 | |||||
Excess tax benefits from stock-based compensation | — | 194 | |||||
Net cash used in financing activities | (14,040 | ) | (84,972 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (236 | ) | (169 | ) | |||
Net decrease in cash and cash equivalents | (11,461 | ) | (48,301 | ) | |||
Cash and cash equivalents at beginning of period | 73,032 | 90,329 | |||||
Cash and cash equivalents at end of period | $ | 61,571 | $ | 42,028 | |||
Harmonic Inc.
Revenue Information
(Unaudited)
Three months ended | Nine months ended | ||||||||||||||||||||||||||
October 2, 2015 | September 26, 2014 | October 2, 2015 | September 26, 2014 | ||||||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||||||
Product | |||||||||||||||||||||||||||
Video Products | $ | 48,629 | 59 | % | $ | 60,668 | 56 | % | $ | 153,439 | 53 | % | $ | 181,882 | 56 | % | |||||||||||
Cable Edge | 8,616 | 10 | % | 23,915 | 22 | % | 61,726 | 21 | % | 77,488 | 24 | % | |||||||||||||||
Services and Support | 26,060 | 31 | % | 23,478 | 22 | % | 75,259 | 26 | % | 66,312 | 20 | % | |||||||||||||||
Total | $ | 83,305 | 100 | % | $ | 108,061 | 100 | % | $ | 290,424 | 100 | % | $ | 325,682 | 100 | % | |||||||||||
Geography | |||||||||||||||||||||||||||
Americas | $ | 44,926 | 54 | % | $ | 60,007 | 56 | % | $ | 165,786 | 57 | % | $ | 184,959 | 57 | % | |||||||||||
EMEA | 19,269 | 23 | % | 27,430 | 25 | % | 71,302 | 25 | % | 83,136 | 25 | % | |||||||||||||||
APAC | 19,110 | 23 | % | 20,624 | 19 | % | 53,336 | 18 | % | 57,587 | 18 | % | |||||||||||||||
Total | $ | 83,305 | 100 | % | $ | 108,061 | 100 | % | $ | 290,424 | 100 | % | $ | 325,682 | 100 | % | |||||||||||
Market | |||||||||||||||||||||||||||
Service Provider | $ | 46,451 | 56 | % | $ | 67,497 | 62 | % | $ | 178,466 | 61 | % | $ | 214,055 | 66 | % | |||||||||||
Broadcast and Media | 36,854 | 44 | % | 40,564 | 38 | % | 111,958 | 39 | % | 111,627 | 34 | % | |||||||||||||||
Total | $ | 83,305 | 100 | % | $ | 108,061 | 100 | % | $ | 290,424 | 100 | % | $ | 325,682 | 100 | % | |||||||||||
Harmonic Inc.
Segment Revenue and Operating Income (Loss)
(Unaudited)
Three months ended | Nine months ended | ||||||||||||||
October 2, 2015 | September 26, 2014 | October 2, 2015 | September 26, 2014 | ||||||||||||
(In thousands) | |||||||||||||||
Net revenue: | |||||||||||||||
Video | $ | 71,889 | $ | 81,360 | $ | 219,378 | $ | 239,823 | |||||||
Cable Edge | 11,416 | 26,701 | 71,046 | 85,859 | |||||||||||
Total consolidated net revenue | $ | 83,305 | $ | 108,061 | $ | 290,424 | $ | 325,682 | |||||||
Operating income (loss): | |||||||||||||||
Video | $ | 3,575 | $ | 6,609 | $ | 8,386 | $ | 9,426 | |||||||
Cable Edge | (3,963 | ) | 120 | 2,582 | 3,178 | ||||||||||
Total segment operating income (loss) | (388 | ) | 6,729 | 10,968 | 12,604 | ||||||||||
Unallocated corporate expenses* | (510 | ) | (403 | ) | (739 | ) | (915 | ) | |||||||
Stock-based compensation | (3,827 | ) | (4,352 | ) | (11,845 | ) | (12,720 | ) | |||||||
Amortization of intangibles | (1,532 | ) | (5,512 | ) | (4,971 | ) | (18,378 | ) | |||||||
Loss from operations | (6,257 | ) | (3,538 | ) | (6,587 | ) | (19,409 | ) | |||||||
Non-operating income (expense) | 178 | (214 | ) | (2,702 | ) | (185 | ) | ||||||||
Loss before income taxes | $ | (6,079 | ) | $ | (3,752 | ) | $ | (9,289 | ) | $ | (19,594 | ) | |||
*Unallocated corporate expenses include certain corporate-level operating expenses and charges such as restructuring and related charges.
Harmonic Inc.
GAAP to Non-GAAP Reconciliations (Unaudited)
(In thousands, except percentages and per share data)
Three months ended | ||||||||||||
October 2, 2015 | ||||||||||||
Gross Profit | Total Operating Expense | Loss from Operations | Net loss | |||||||||
GAAP | $ | 46,231 | $ | 52,488 | $ | (6,257 | ) | $ | (4,811 | ) | ||
Stock-based compensation in cost of revenue | 433 | — | 433 | 433 | ||||||||
Stock-based compensation in research and development | — | (1,074 | ) | 1,074 | 1,074 | |||||||
Stock-based compensation in selling, general and administrative | — | (2,320 | ) | 2,320 | 2,320 | |||||||
Amortization of intangibles | 86 | (1,446 | ) | 1,532 | 1,532 | |||||||
Restructuring and related charges | 113 | (397 | ) | 510 | 510 | |||||||
Discrete tax items and tax effect of non-GAAP adjustments | — | — | — | (1,224 | ) | |||||||
Non-GAAP | $ | 46,863 | $ | 47,251 | $ | (388 | ) | $ | (166 | ) | ||
As a % of revenue (GAAP) | 55.5 | % | 63.0 | % | (7.5 | )% | (5.8 | )% | ||||
As a % of revenue (Non-GAAP) | 56.3 | % | 56.7 | % | (0.5 | )% | (0.2 | )% | ||||
Diluted net loss per share: | ||||||||||||
Diluted net loss per share-GAAP | $ | (0.05 | ) | |||||||||
Diluted net loss per share-Non-GAAP | $ | 0.00 | ||||||||||
Shares used to compute diluted net loss per share: | ||||||||||||
GAAP | 87,991 | |||||||||||
Non-GAAP | 87,991 | |||||||||||
Three months ended | ||||||||||||
July 3, 2015 | ||||||||||||
Gross Profit | Total Operating Expense | Income (loss) from Operations | Net Income (Loss) | |||||||||
GAAP | $ | 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 | $ | 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 | |||||||||||
Three months ended | ||||||||||||
September 26, 2014 | ||||||||||||
Gross Profit | Total Operating Expense | Income (Loss) from Operations | Net Income | |||||||||
GAAP | $ | 53,428 | $ | 56,966 | $ | (3,538 | ) | $ | 1,078 | |||
Stock-based compensation in cost of revenue | 612 | — | 612 | 612 | ||||||||
Stock-based compensation in research and development | — | (1,219 | ) | 1,219 | 1,219 | |||||||
Stock-based compensation in selling, general and administrative | — | (2,521 | ) | 2,521 | 2,521 | |||||||
Amortization of intangibles | 3,851 | (1,661 | ) | 5,512 | 5,512 | |||||||
Restructuring and related charges | 15 | (388 | ) | 403 | 403 | |||||||
Discrete tax items and tax effect of non-GAAP adjustments | — | — | — | (6,198 | ) | |||||||
Non-GAAP | $ | 57,906 | $ | 51,177 | $ | 6,729 | $ | 5,147 | ||||
As a % of revenue (GAAP) | 49.4 | % | 52.7 | % | (3.3 | )% | 1.0 | % | ||||
As a % of revenue (Non-GAAP) | 53.6 | % | 47.4 | % | 6.2 | % | 4.8 | % | ||||
Diluted net income per share: | ||||||||||||
Diluted net income per share-GAAP | $ | 0.01 | ||||||||||
Diluted net income per share-Non-GAAP | $ | 0.06 | ||||||||||
Shares used to compute diluted net income per share: | ||||||||||||
GAAP | 91,800 | |||||||||||
Non-GAAP | 91,800 | |||||||||||