HLIT
$5.88
Harmonic
$.05
.86%
Earnings Details
2nd Quarter June 2016
Tuesday, August 09, 2016 4:03:10 PM
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Summary

Harmonic Beats

Harmonic (HLIT) reported a 2nd Quarter June 2016 loss of $0.05 per share on revenue of $108.8 million. The consensus estimate was a loss of $0.08 per share on revenue of $104.9 million. The Earnings Whisper number was for a loss of $0.08 per share. Revenue grew 5.5% on a year-over-year basis.

The company said it expects third quarter non-GAAP earnings of $0.01 to $0.03 per share on revenue of $54.0 million to $55.0 million. The current consensus earnings estimate is $0.03 per share on revenue of $106.4 million for the quarter ending September 30, 2016. The company also said it now expects 2016 earnings of $0.01 to $0.06 per share on revenue of $410.0 million to $420.0 million. The company's previous guidance was earnings of $0.09 to $0.12 per share and now expects revenue of $398.0 million to $413.0 million and the current consensus earnings estimate is $0.10 per share on revenue of $407.7 million for the year ending December 31, 2016.

Harmonic Inc designs, manufactures and sells video products and system solutions that enable service providers to efficiently deliver the next generation of broadcast and on-demand services.

Results
Reported Earnings
($0.05)
Earnings Whisper
($0.08)
Consensus Estimate
($0.08)
Reported Revenue
$108.8 Mil
Revenue Estimate
$104.9 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Harmonic Announces Second Quarter 2016 Results

SAN JOSE, CA--(Marketwired - August 09, 2016) - Harmonic Inc. (HLIT), the worldwide leader in video delivery infrastructure, announced today its preliminary and unaudited results for the second quarter of 2016.

GAAP net revenue for the second quarter of 2016 was $108.8 million, compared with $81.8 million for the first quarter of 2016 and $103.1 million for the second quarter of 2015.

Non-GAAP net revenue for the second quarter of 2016 was $109.5 million, compared with $82.5 million for the first quarter of 2016 and $103.1 million for the second quarter of 2015.

Bookings for the second quarter of 2016 were $117.3 million, compared with $109.6 million for the first quarter of 2016 and $99.3 million for the second quarter of 2015.

GAAP net loss for the second quarter of 2016 was $(20.6) million, or $(0.27) per diluted share, compared with a GAAP net loss for the first quarter of 2016 of $(25.2) million, or $(0.33) per diluted share, and a GAAP net loss of $(1.0) million, or $(0.01) per diluted share, for the second quarter of 2015.

Non-GAAP net loss for the second quarter of 2016 was $(0.2) million, or $0.00 per diluted share, compared with non-GAAP net loss for the first quarter of 2016 of $(8.2) million, or $(0.11) per diluted share, and non-GAAP net income of $4.2 million, or $0.05 per diluted share, for the second quarter of 2015. See "Use of Non-GAAP Financial Measures" and "GAAP to Non-GAAP Reconciliations" below.

Total cash, cash equivalents and short-term investments were $65.3 million at the end of the second quarter of 2016, down $11.0 million from $76.2 million at the end of the prior quarter, primarily due to the payment of certain purchase price adjustments related to the Thomson Video Networks ("TVN") acquisition and an increase in accounts receivable which reflects our sequential revenue growth and payments of restructuring and integration charges. In the second quarter of 2016, the Company used approximately $2.9 million of cash from operations.

"Our financial results for the second quarter of 2016 were at the high end of our plan for both our Video and Cable Edge segments," said Patrick Harshman, Harmonic’s President and CEO. "Consequently, we enter the second half of the year with record backlog and deferred revenue. Our new CableOS products are scheduled to begin shipping in the fourth quarter of this year, and we remain on track to realize targeted synergy savings from the combination of Harmonic and TVN," concluded Mr. Harshman.

Second Quarter 2016 Highlights

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.

Business Outlook

Third Quarter 2016 GAAP Financial Guidance

For the third quarter of 2016, Harmonic anticipates:

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

2016 GAAP Financial Guidance

Harmonic’s projections for full year 2016 include two fiscal quarters of financial projections for TVN, from the third quarter through the fourth quarter of 2016.

For 2016, Harmonic anticipates:

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

Third Quarter 2016 Non-GAAP Financial Guidance

For the third quarter of 2016, Harmonic anticipates:

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

See "Use of Non-GAAP Financial Measures" and "GAAP to Non-GAAP Reconciliations" below.

2016 Non-GAAP Financial Guidance

For 2016, Harmonic anticipates:

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

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

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, August 9, 2016. A listen-only broadcast of the conference call can be accessed either from the Company’s website at www.harmonicinc.com or by calling +1.847.585.4405 or +1.888.771.4371 (passcode 42982000). The replay 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 42982000#).

About Harmonic Inc.

Harmonic (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 second quarter ended July 1, 2016 and our expectations concerning quarter-on-quarter growth; GAAP net revenue, GAAP gross margins, GAAP operating expenses, GAAP operating income (loss), GAAP EPS, non-GAAP revenue, non-GAAP gross margins, non-GAAP operating expenses, non-GAAP operating income (loss), non-GAAP EPS, and tax rate and capital expenditures for the third quarter of 2016 and fiscal year ended December 31, 2016, as well as cash on hand at the end of the third quarter of 2016 and at December 31, 2016. 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: unexpected delays, difficulties and/or costs relating to integrating TVN with Harmonic; anticipated business opportunities and operational efficiencies for the combined company do not fully materialize; 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 fluctuations 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 risks associated with our outstanding convertible notes. 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, 2015, our recent Quarterly Reports 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

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: revenue, 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 types of non-GAAP adjustments described below have historically been excluded from our GAAP financial measures: acquisition accounting impacts to TVN deferred revenue and TVN inventory valuation; TVN acquisition-and integration-related costs; Cable Edge inventory charge in connection with certain product lines; restructuring and related charges; and non-cash items, such as impairment of long-term investment, stock-based compensation expense, amortization of intangibles and non-cash interest expenses related to convertible debt 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.

 
Harmonic Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands, except per share data)
 
 
  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
 
 
     
       
 
 
Harmonic Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share amounts)
 
 
  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
 
 
 
                               
(1) On February 29, 2016, Harmonic closed the acquisition of TVN and as a result, our 2016 results for the six months ended July 1, 2016 include TVN results beginning on February 29, 2016.
 
 
 
Harmonic Inc.
 
Condensed Consolidated Statements of Cash Flows
 
(Unaudited, in thousands)
 
 
 
 
  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
 
 
               

Harmonic Inc. Revenue Information (Unaudited, in thousands, except percentages)

 
   
     
     
 
 
  Three months
    Three months
    Three months ended
 
ended
ended
 
  July 1, 2016
    April 1, 2016
    July 3, 2015
 
 
  GAAP
  Adjustment
  Non-GAAP
    GAAP(2)
  Adjustment
  Non-GAAP(2)
    GAAP and Non-GAAP(3)
 
(1)
(1)
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
%
 
                                                           
(1) Non-GAAP revenue for the three months ended July 1, 2016 and April 1, 2016 include $0.8 million and $0.6 million adjustments relating to TVN deferred revenue as a result of acquisition accounting, respectively.
 
(2) Excludes TVN revenue prior to March 1, 2016.
 
(3) There is no revenue adjustment for the three months ended July 3, 2015.
 
 
Harmonic Inc.
GAAP to Non-GAAP Reconciliations (Unaudited)
(In thousands, except percentages and per share data)
 
   
 
 
  Three months ended
 
 
  July 1, 2016
 
 
  Revenue
  Gross
    Total
    Income
    Net loss
 
Profit
Operating
(loss) from
Expense
Operations
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
      Total
      Loss from Operations
      Net Loss
 
Profit
Operating
Expense
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
      Total
      Income
      Net
 
Profit
Operating
(Loss) from Operations
Income (Loss)
Expense
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
 
 
 
                   
       
       
 

Harmonic Inc. GAAP to Non-GAAP Reconciliations on Business Outlook (In millions, except percentages and per share data)

 
   
 
  Q3 2016 Financial Guidance
 
  Revenue
  Gross Profit
  Total
  Income (loss)
  Net
Operating
from
Income (loss)
Expense
Operations
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
  Income (loss)
  Net
Operating
from
Income (loss)
Expense
Operations
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
 
 
 
 
   
   
   
   

CONTACTS: Harold Covert Chief Financial Officer Harmonic Inc. +1.408.542.2500 Blair King Director, Investor Relations Harmonic Inc. +1.408.490.6172