SAN JOSE, Calif., May 1, 2017 /PRNewswire/ — Harmonic Inc. (NASDAQ: HLIT), the worldwide leader in video delivery infrastructure, announced today its unaudited results for the first quarter of 2017.

GAAP net revenue for the first quarter of 2017 was $82.9 million, compared with $113.1 million for the fourth quarter of 2016 and $81.8 million for the first quarter of 2016.

Non-GAAP net revenue for the first quarter of 2017 was $83.5 million, compared with $113.8 million for the fourth quarter of 2016 and $82.5 million for the first quarter of 2016.

Bookings for the first quarter of 2017 were $82.1 million, compared with $116.9 million for the fourth quarter of 2016 and $109.6 million for the first quarter of 2016.

The GAAP net loss for the first quarter of 2017 was $(24.0) million, or $(0.30) per diluted share, compared with a GAAP net loss for the fourth quarter of 2016 of $(10.4) million, or $(0.13) per diluted share, and a GAAP net loss of $(25.2) million, or $(0.33) per diluted share, for the first quarter of 2016.

The non-GAAP net loss for the first quarter of 2017 was $(11.2) million, or $(0.14) per diluted share, compared with non-GAAP net income for the fourth quarter of 2016 of $6.7 million, or $0.08 per diluted share, and a non-GAAP net loss of $(8.2) million, or $(0.11) per diluted share, for the first quarter of 2016. See «Use of Non-GAAP Financial Measures» and «GAAP to Non-GAAP Reconciliations» below.

Total cash, cash equivalents and short-term investments were $55.3 million at the end of the first quarter of 2017, down $7.3 million from $62.6 million at the end of the prior quarter.

«Our first quarter results were impacted by softer than expected service provider spending in the final month of the quarter,» said Patrick Harshman, Harmonic’s President and Chief Executive Officer. «Looking ahead, our opportunity pipeline gives us confidence that our Video business segment will rebound and deliver on our targeted year-over-year growth. In our Cable Edge segment, first quarter CableOS trials and deployments were executed as planned and we continue to anticipate volume purchases in the second half of the year.»

Business Outlook

Second Quarter 2017 GAAP Financial Guidance

For the second quarter of 2017, Harmonic anticipates:

  • Net revenue to be $94.5 million to $102.5 million, which includes Video revenue of $85.9 million to $90.9 million and Cable Edge revenue of $8.6 million to $11.6 million
  • Gross margin to be 49.5% to 50.5% which includes Video gross margin of 52.0% to 53.0% and Cable Edge gross margin of 28.5% to 30.5%
  • Operating expense to be $59.6 million to $60.6 million
  • Operating loss to be $(12.8) million to $(8.8) million
  • GAAP tax expense to be approximately $1.0 million
  • EPS to be $(0.20) to $(0.16)
  • Share count for EPS calculation to be approximately 81 million shares of Harmonic common stock
  • Cash and short-term investments at quarter-end to be $40 million to $45 million

Second Quarter 2017 Non-GAAP Financial Guidance

For the second quarter of 2017, Harmonic anticipates:

  • Net revenue to be $95 million to $103 million, which includes Video revenue of $86 million to $91 million and Cable Edge revenue of $9 million to $12 million
  • Gross margin to be 52.5% to 53.5% which includes Video gross margin of 55.0% to 56.0% and Cable Edge gross margin of 33.0% to 34.0%
  • Operating expense to be $52.5 million to $53.5 million
  • Operating loss of $(2.5) million ranging to an operating profit of $1.5 million
  • EPS of ($0.04) ranging to break-even
  • Tax rate to be approximately 15%
  • Share count for EPS calculation to be approximately 81 million shares of Harmonic common stock
  • Cash and short-term investments at quarter-end to be $40 million to $45 million

2017 GAAP Financial Guidance

For 2017, Harmonic anticipates:

  • Net revenue to be $398.5 million to $418.5 million, which includes Video revenue of $349.7 million to $359.7 million and Cable Edge revenue of $48.8 million to $58.8 million
  • Gross margin to be 50.5% to 52.0% which includes Video gross margin of 53.0% to 54.0% and Cable Edge gross margin of 36.0% to 37.0%
  • Operating expense to be $227.7 million to $228.7 million
  • Operating loss to be $(25.6) million to $(11.6) million
  • GAAP tax expense to be approximately $3.0 million
  • EPS to be $(0.48) to $(0.33)
  • Share count for EPS calculation to be approximately 82 million shares of Harmonic common stock
  • Cash and short-term investments at quarter-end to be $50 million to $55 million

2017 Non-GAAP Financial Guidance

For 2017, Harmonic anticipates:

  • Net revenue to be $400 million to $420 million, which includes Video revenue of $350 million to $360 million and Cable Edge revenue of $50 million to $60 million
  • Gross margin to be 53.5% to 54.5% which includes Video gross margin of 56.0% to 57.0% and Cable Edge gross margin of 38.0% to 39.0%
  • Operating expense to be $206 million to $207 million
  • Operating profit to be $8 million to $22 million
  • EPS to be $0.02 to $0.16
  • Tax rate to be approximately 15%
  • Share count for EPS calculation to be approximately 82.0 million shares of Harmonic common stock
  • Cash and short-term investments at year-end to be $50.0 million to $55.0 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 Monday, May 1, 2017. 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 7203137). The replay will be available after 4:30 p.m. Pacific at the same website address or by calling +1.404.537.3406 or +1.855.859.2056 (passcode 7203137).

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: 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 and non-GAAP EPS for the second quarter of 2017 and for the fiscal year ended December 31, 2017, share count, as well as cash and short-term investments at the end of the second quarter of 2017. 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 CableOS™ 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, 2016, 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, total non-operating income (expense), tax rate, net income (loss), 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 warrant amortization, 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.

 

Harmonic Inc.

Preliminary Condensed Consolidated Balance Sheets

(Unaudited, in thousands, except per share data)

March 31, 2017

December 31, 2016

ASSETS

Current assets:

   Cash and cash equivalents

$

55,292

$

55,635

   Short-term investments

6,923

   Accounts receivable, net

69,771

86,765

   Inventories

39,920

41,193

   Prepaid expenses and other current assets

27,659

26,319

Total current assets

192,642

216,835

Property and equipment, net

31,733

32,164

Goodwill

237,911

237,279

Intangibles, net

27,208

29,231

Other long-term assets

41,496

38,560

Total assets

$

530,990

$

554,069

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

   Other debts and capital lease obligations, current

$

6,802

$

7,275

   Accounts payable

22,340

28,892

   Income taxes payable

1,153

1,166

   Deferred revenue

59,363

52,414

   Accrued and other current liabilities

52,062

55,150

Total current liabilities

141,720

144,897

Convertible debt, long-term

104,575

103,259

Other debts and capital lease obligations, long-term

13,767

13,915

Income taxes payable, long-term

2,961

2,926

Other non-current liabilities

16,559

18,431

Total liabilities

279,582

283,428

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; 80,503 and 78,456 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively

81

78

   Additional paid-in capital

2,257,093

2,254,055

   Accumulated deficit

(1,998,884)

(1,976,222)

   Accumulated other comprehensive loss

(6,882)

(7,270)

Total stockholders’ equity

251,408

270,641

Total liabilities and stockholders’ equity

$

530,990

$

554,069

 

Harmonic Inc.

Preliminary Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except per share data)

Three months ended

March 31, 2017

April 1, 2016

Revenue:

Product

$

50,404

$

57,644

Services

32,539

24,188

Total net revenue

$

82,943

$

81,832

Cost of revenue:

Product

26,102

27,189

Services

16,433

13,989

Total cost of revenue

42,535

41,178

   Gross profit

40,408

40,654

Operating expenses:

   Research and development

24,882

23,563

   Selling, general and administrative

34,631

32,870

   Amortization of intangibles

774

2,365

   Restructuring and related charges

1,279

2,612

      Total operating expenses

61,566

61,410

Loss from operations

(21,158)

(20,756)

Interest expense, net

(2,590)

(2,421)

Other expense, net

(511)

(9)

Loss on impairment of long-term investment

(1,476)

Loss before income taxes

(24,259)

(24,662)

(Benefit from) provision for income taxes

(232)

518

Net loss

$

(24,027)

$

(25,180)

Net loss per share:

   Basic and diluted

$

(0.30)

$

(0.33)

Shares used in per share calculation:

   Basic and diluted

79,810

76,996

 

Harmonic Inc.

Preliminary Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)

Three months ended

March 31, 2017

April 1, 2016

Cash flows from operating activities:

Net loss

$

(24,027)

$

(25,180)

Adjustments to reconcile net loss to net cash used in operating activities:

   Amortization of intangibles

2,069

2,783

   Depreciation

3,599

3,317

   Stock-based compensation

3,251

3,094

   Amortization of discount on convertible debt

1,316

1,187

   Amortization of non-cash warrant

416

   Restructuring, asset impairment and loss on retirement of fixed assets

187

1,675

   Loss on impairment of long-term investment

1,476

   Provision for excess and obsolete inventories

387

418

   Allowance for doubtful accounts, returns and discounts

2,700

739

   Other non-cash adjustments, net

72

   Changes in operating assets and liabilities, net of effects of acquisition:

      Accounts receivable

14,388

(10,894)

      Inventories

942

(51)

      Prepaid expenses and other assets

(3,441)

(6,078)

      Accounts payable

(6,687)

(3,890)

      Deferred revenue

5,725

24,963

      Income taxes payable

6

(13)

      Accrued and other liabilities

(3,999)

1,046

Net cash used in operating activities

(3,096)

(5,408)

Cash flows from investing activities:

Acquisition of business, net of cash acquired

(69,532)

   Proceeds from maturities and sale of investments

6,898

7,394

   Purchases of property and equipment

(3,217)

(2,664)

Net cash provided by (used in) investing activities

3,681

(64,802)

Cash flows from financing activities:

Payment of convertible debt issuance costs

(582)

Proceeds from other debts and capital leases

262

Repayment of other debts and capital leases

(953)

(114)

   Proceeds from common stock issued to employees

2,114

2,074

   Payment of tax withholding obligations related to net share settlements of restricted stock units

(2,383)

(955)

Net cash (used in) provided by financing activities

(1,222)

685

Effect of exchange rate changes on cash and cash equivalents

294

330

Net decrease in cash and cash equivalents

(343)

(69,195)

Cash and cash equivalents at beginning of period

55,635

126,190

Cash and cash equivalents at end of period

$

55,292

$

56,995

 

Harmonic Inc.

Preliminary Revenue Information

(Unaudited, in thousands, except percentages)

Three months ended

March 31, 2017

December 31, 2016

April 1, 2016

GAAP

Adjust-ments(1)

Non-GAAP

GAAP

Adjust-ments(1)

Non-GAAP

GAAP(2)

Adjust-ments(1)

Non-GAAP(2)

Product

Video Products

$

45,518

$

$

45,518

55%

$

75,151

$

$

75,151

67%

$

44,212

$

355

$

44,567

54%

Cable Edge

4,886

191

5,077

6%

4,767

295

5,062

4%

13,432

13,432

16%

Services and Support

32,539

336

32,875

39%

33,184

378

33,562

29%

24,188

268

24,456

30%

Total

$

82,943

$

527

$

83,470

100%

$

113,102

$

673

$

113,775

100%

$

81,832

$

623

$

82,455

100%

Geography

Americas

$

37,906

$

416

$

38,322

46%

$

52,736

$

474

$

53,210

47%

$

48,977

$

81

$

49,058

59%

EMEA

25,439

111

25,550

31%

41,036

77

41,113

36%

19,855

401

20,256

25%

APAC

19,598

19,598

23%

19,330

122

19,452

17%

13,000

141

13,141

16%

Total

$

82,943

$

527

$

83,470

100%

$

113,102

$

673

$

113,775

100%

$

81,832

$

623

$

82,455

100%

Market

Service Provider

$

48,028

$

416

$

48,444

58%

$

69,426

$

568

$

69,994

62%

$

51,270

$

150

$

51,420

62%

Broadcast and Media

34,915

111

35,026

42%

43,676

105

43,781

38%

30,562

473

31,035

38%

Total

$

82,943

$

527

$

83,470

100%

$

113,102

$

673

$

113,775

100%

$

81,832

$

623

$

82,455

100%

(1) Non-GAAP revenue for the three months ended March 31, 2017, December 31, 2016 and April 1, 2016 include $0.1 million, $0.2 million and $0.6 million adjustments relating to TVN deferred revenue as a result of acquisition accounting, respectively. In addition, non-GAAP revenue for the three months ended March 31, 2017 and December 31, 2016 each includes $0.4 million adjustment related to the amortization of Comcast warrant.

(2) Excludes TVN revenues prior to March 1, 2016.

 

Harmonic Inc.

Preliminary Segment Information

(Unaudited, in thousands, except percentages)

Three months ended March 31, 2017

Video

Cable Edge

Total Segment Measures

Adjustments (1)

Consolidated GAAP Measures

Net revenue

$

74,453

$

9,017

$

83,470

$

(527)

$

82,943

Gross profit

40,884

2,626

43,510

(3,102)

40,408

Gross margin%

54.9

%

29.1

%

52.1

%

48.7

%

Operating loss

(5,725)

(5,664)

(11,389)

(9,769)

(21,158)

Operating margin%

(7.7)

%

(62.8)%

(13.6)

%

(25.5)

%

Three months ended December 31, 2016

Video

Cable Edge

Total Segment Measures

Adjustments (1)

Consolidated GAAP Measures

Net revenue

$

104,779

$

8,996

$

113,775

$

(673)

$

113,102

Gross profit

60,443

3,330

63,773

(6,080)

57,693

Gross margin%

57.7

%

37.0

%

56.1

%

51.0

%

Operating income (loss)

14,145

(4,579)

9,566

(25,795)

(16,229)

Operating margin%

13.5

%

(50.9)

%

8.4

%

(14.3)

%

Three months ended April 1, 2016 (2)

Video

Cable Edge

Total Segment Measures

Adjustments (1)

Consolidated GAAP Measures

Net revenue

$

65,631

$

16,824

$

82,455

$

(623)

$

81,832

Gross profit

34,892

7,248

42,140

(1,486)

40,654

Gross margin%

53.2

%

43.1

%

51.1

%

49.7

%

Operating loss

(6,535)

(1,853)

(8,388)

(12,368)

(20,756)

Operating margin%

(10.0)

%

(11.0)

%

(10.2)

%

(25.4)

%

(1) See «Use of Non-GAAP Financial Measures» and «GAAP to Non-GAAP Reconciliations» below.

(2) Excludes TVN results prior to March 1, 2016.

 

Harmonic Inc.

GAAP to Non-GAAP Reconciliations (Unaudited)

(In thousands, except percentages and per share data)

Three months ended

March 31, 2017

Revenue

Gross Profit

Total Operating Expense

Loss from Operations

Total Non-operating Expense, net

Net Loss

GAAP

$

82,943

$

40,408

$

61,566

$

(21,158)

$

(3,101)

$

(24,027)

  Cable Edge inventory charge

(15)

(15)

(15)

  Acquisition accounting impact related to TVN deferred revenue

111

111

111

111

  Accounting impact related to warrant amortization

416

416

416

416

  Stock-based compensation in cost of revenue

445

445

445

  Stock-based compensation in research and development

(977)

977

977

  Stock-based compensation in selling, general and administrative

(1,829)

1,829

1,829

  Amortization of intangibles

1,295

(774)

2,069

2,069

  Restructuring and related charges

508

(1,279)

1,787

1,787

  TVN acquisition-and integration-related costs

342

(1,808)

2,150

2,150

  Non-cash interest expenses related to convertible notes

1,316

1,316

  Discrete tax items and tax effect of non-GAAP adjustments

1,744

Total adjustments

527

3,102

(6,667)

9,769

1,316

12,829

Non-GAAP

$

83,470

$

43,510

$

54,899

$

(11,389)

$

(1,785)

$

(11,198)

As a % of revenue (GAAP)

48.7

%

74.2

%

(25.5)%

(3.7)%

(29.0)%

As a % of revenue (Non-GAAP)

52.1

%

65.8

%

(13.6)%

(2.1)%

(13.4)%

Diluted net loss per share:

  Diluted net loss per share-GAAP

$

(0.30)

  Diluted net loss per share-Non-GAAP

$

(0.14)

Shares used to compute diluted net loss per share:

  GAAP and Non-GAAP

79,810

Three months ended

December 31, 2016

Revenue

Gross Profit

Total Operating Expense

Income (Loss) from Operations

Total Non-operating Expense, net

Net Income (Loss)

GAAP

$

113,102

$

57,693

$

73,922

$

(16,229)

$

(2,848)

$

(10,443)

  Cable Edge inventory charge

(327)

(327)

(327)

  Acquisition accounting impact related to TVN deferred revenue

239

239

239

239

  Accounting impact related to warrant amortization

434

434

434

434

  Stock-based compensation in cost of revenue

543

543

543

  Stock-based compensation in research and development

(1,130)

1,130

1,130

  Stock-based compensation in selling, general and administrative

(2,845)

2,845

2,845

  Amortization of intangibles

1,328

(797)

2,125

2,125

  Restructuring and related charges

3,975

(11,519)

15,494

15,494

  Gain on pension curtailment

(551)

1,404

(1,955)

(1,955)

  TVN acquisition-and integration-related costs

439

(4,828)

5,267

(98)

5,169

  Non-cash interest expenses related to convertible notes

1,295

1,295

  Discrete tax items and tax effect of non-GAAP adjustments

(9,821)

Total adjustments

673

6,080

(19,715)

25,795

1,197

17,171

Non-GAAP

$

113,775

$

63,773

$

54,207

$

9,566

$

(1,651)

$

6,728

As a % of revenue (GAAP)

51.0

%

65.4

%

(14.3)

%

(2.5)

%

(9.2)

%

As a % of revenue (Non-GAAP)

56.1

%

47.6

%

8.4

%

(1.5)

%

5.9

%

Diluted net loss per share:

  Diluted net loss per share-GAAP

$

(0.13)

  Diluted net income per share-Non-GAAP

$

0.08

Shares used to compute diluted net income (loss) per share:

  GAAP

78,389

  Non-GAAP

80,112

Three months ended

April 1, 2016

Revenue

Gross Profit

Total Operating Expense

Loss from Operations

Total Non-operating Expense, net

Net Loss

GAAP

$

81,832

$

40,654

$

61,410

$

(20,756)

$

(3,906)

$

(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

  Loss on impairment of long-term investment

1,476

1,476

  Non-cash interest expenses related to convertible notes

1,187

1,187

  Discrete tax items and tax effect of non-GAAP adjustments

1,963

Total adjustments

623

1,486

(10,882)

12,368

2,663

16,994

Non-GAAP

$

82,455

$

42,140

$

50,528

$

(8,388)

$

(1,243)

$

(8,186)

As a % of revenue (GAAP)

49.7

%

75.0

%

(25.4)

%

(4.8)

%

(30.8)

%

As a % of revenue (Non-GAAP)

51.1

%

61.3

%

(10.2)

%

(1.5)

%

(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 and Non-GAAP

76,996

 

Harmonic Inc.

GAAP to Non-GAAP Reconciliations on Business Outlook

(In millions, except percentages and per share data)

Q2-2017 Financial Guidance

Revenue

Gross Profit

Total Operating Expense

Income(loss) from Operations

Total Non-operating Expense, net

Net Income(loss)

GAAP

$94.5 to

 $102.5

$46.8 to

 $51.8

$59.6 to

 $60.6

$(12.8) to

 $(8.8)

$(2.8)

($16.6) to

 ($13.2)

  Acquisition accounting impact related to TVN deferred revenue

0.1

0.1

0.1

0.1

  Accounting impact related to warrant amortization

0.4

0.4

0.4

0.4

  Stock-based compensation expense

1.1

(5.7)

6.8

6.8

  Amortization of intangibles

1.3

(0.8)

2.1

2.1

  Restructuring and related charges and TVN integration costs

0.3

(0.6)

0.9

0.9

  Non-cash interest expense related to convertible notes

1.4

1.4

  Discrete tax items and tax effect of non-GAAP adjustments

1.5

Total adjustments

0.5

3.2

(7.1)

10.3

1.4

13.2

Non-GAAP

$95.0 to $103.0

$50.0 to

 $55.0

$52.5 to

 $53.5

$(2.5) to

 $1.5

$(1.4)

$(3.4) to

 $0.0

As a % of revenue (GAAP)

49.5% to 50.5%

59.0% to 63.0%

(13.5)% to (8.5)%

(3.0%)

(17.5)% to (13.0)%

As a % of revenue (Non-GAAP)

52.5% to 53.5%

52.0% to 55.0%

(2.5)% to 1.5%

(1.5%)

(3.5)% to 0%

Diluted loss per share:

  Diluted net loss per share-GAAP

$(0.20) to $(0.16)

  Diluted net loss per share-Non-GAAP

$(0.04) to break-even

Shares used to compute diluted loss per share:

  GAAP and Non-GAAP

81.0

 

Harmonic Inc.

GAAP to Non-GAAP Reconciliations on Business Outlook

(In millions, except percentages and per share data)

2017 Financial Guidance

Revenue

Gross Profit

Total Operating Expense

Income(loss) from Operations

Total Non-operating Expense, net

Net Income(loss)

GAAP

$398.5 to

 $418.5

$202.1 to

 $217.1

$227.7 to

 $228.7

$(25.6) to

 $(11.6)

$(11.6)

$(39.1) to

 $(27.1)

  Acquisition accounting impact related to TVN deferred revenue

0.3

0.3

0.3

0.3

  Accounting impact related to warrant amortization

1.2

1.2

1.2

1.2

  Stock-based compensation expense

2.7

(16.1)

18.8

18.8

  Amortization of intangibles

5.2

(3.1)

8.3

8.3

  Restructuring and related charges and TVN integration costs

2.5

(2.5)

5.0

5.0

  Non-cash interest expense related to convertible notes

5.5

5.5

  Discrete tax items and tax effect of non-GAAP adjustments

1.5

Total adjustments

1.5

11.9

(21.7)

33.6

5.5

40.6

Non-GAAP

$400.0 to $420.0

$214.0 to

 $229.0

$206.0 to

 $207.0

$8.0 to

 $22.0

$(6.1)

$1.5 to $13.5

As a % of revenue (GAAP)

50.5% to 52.0%

54.5%

 to 57.0%

(6.5)% to (3.0)%

(3.0%)

(10.0)% to (6.5)%

As a % of revenue (Non-GAAP)

53.5% to 54.5%

49.5%

to 51.5%

2.0% to 5%

(1.5%)

0.5% to 3.0%

Diluted income (loss) per share:

  Diluted net loss per share-GAAP

$(0.48) to $(0.33)

  Diluted net income per share-Non-GAAP

$0.02 to

$0.16

Shares used to compute diluted income (loss) per share:

  GAAP and Non-GAAP

82.0

 

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SOURCE Harmonic Inc.