2013-02-19 13:14:49 -
Increases Share Repurchase Program by Amount of Net Proceeds
SAN JOSE, Calif. - February 19, 2013 -- Harmonic Inc. (NASDAQ: HLIT), the
worldwide leader in video delivery infrastructure, announced today it has
reached an agreement to sell its Cable Access business to Aurora Networks, Inc.
for $46 million in cash. The transaction is subject to customary closing
conditions and is expected to be completed by the end of the first quarter of
2013. In addition, consistent with ongoing efforts to review its capital
structure and to deliver value to all
its stockholders, Harmonic's Board of
Directors has approved an increase to its current share repurchase program to
include the net, after-tax cash proceeds from this transaction of approximately
$35 million, contingent upon its closing.
"The sale of the Cable Access business enables us to sharpen our focus on our
largest growth opportunities," said Patrick Harshman, President and Chief
Executive Officer. "Cable Access was Harmonic's lowest margin product line, and
through this transaction and the increase in our authorized share repurchase
program, we will continue to drive growth in our core markets, expand our gross
margin, reduce our outstanding shares, and position our business for stronger
long-term earnings."
The strategic decision to divest the Cable Access business reflects Harmonic's
commitment to the Video Production and Playout, Video Processing, and Cable Edge
product areas, where it currently holds market share leadership. In contrast,
Harmonic is not the market leader in the Cable Access product area, and there is
limited strategic synergy between Cable Access and the Company's other higher
growth product lines. The Cable Access portfolio includes optical transmitters,
amplifiers, receivers and nodes. Given Harmonic's longstanding relationship with
its customers in the Cable Access business, Harmonic is very pleased to work
with Aurora Networks because of its scale, strategic focus and commitment to
customer care.
Additional Financial Details
The Cable Access business generated $52.9 million of net revenue with gross
margin of approximately 30% in calendar year 2012. Harmonic expects that the
sale of the business will be neutral to diluted earnings per share for 2013,
excluding the impact of the share repurchase program.
Results related to the Cable Access business will be recast for prior periods
and reported as discontinued operations in the Company's financial statements
beginning with the first quarter ended March 29, 2013. The Company expects to
recognize in discontinued operations an after-tax gain of approximately $12
million to $14 million related to the sale. The net, after-tax cash proceeds
from the sale are expected to be approximately $35 million.
The expected impact on the outlook for the first quarter is as follows:
Discontinued
Outlook Issued Operations
January 29, 2013 Impact Revised Outlook
Net Revenue $115M - $125M $14M - $16M $100M - $110M
Non-GAAP Gross Margin 49% - 50% 30% 51.5% - 52.5%
Non-GAAP Operating Expenses $56M - $57M $1.0M - $2M $54.5M - $55.5M
Tax Rate 21% - 22% 20% - 21%
Conference Call Information
Harmonic will host a conference call to discuss its sale of the Cable Access
Business at 5:00 a.m. Pacific (8:00 a.m. Eastern) on Tuesday, February
19th, 2013. A listen-only broadcast of the conference call can be accessed
either from the Company's website at www.harmonicinc.com or by calling
+1 866 297 6395 or +1 847 944 7317 (passcode 34311090). The replay will be
available after 6:00 p.m. Pacific at the same website address or by calling
+1 888 843 7419 or +1 630 652 3042 (passcode 34311090).
About Harmonic Inc.
Harmonic (NASDAQ: HLIT) is the worldwide leader in video delivery infrastructure
for emerging television and video services. The company's production-ready
innovation enables content and service providers to efficiently create, prepare,
and deliver differentiated services for television and new media video
platforms. 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: a further expansion of our stock repurchase program and reductions
in outstanding shares; the benefits of the sale of our Cable Access business;
the projected close date for the sale; plans to increase focus on growth
opportunities and to drive growth in our core markets, expand our gross margin
by focusing on higher gross margin product areas and position our business for
stronger long-term earnings by enhancing long-term leverage; reductions in
operating expenses; the impact of the sale on diluted earnings per share in
2013; expectations respecting the amount of net, after tax cash proceeds from
the sale and the amount of after tax gain on the sale to be recognized in
discontinued operations; the impact of discontinued operations on our operating
results for the first quarter of 2013; revised guidance on net revenue, non-GAAP
gross margins and non-GAAP operating expenses for the first quarter of 2013; and
our tax rate for the first quarter of 2013. 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 the possibility, in no particular
order, that: 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 and telco and broadcast and media
industries; customer concentration and consolidation; the impact of general
economic conditions, including as a result of recent turmoil in the global
financial markets, particularly in Europe, on our sales and operations; our
ability to develop new and enhanced products in a timely manner and market
acceptance of new or existing Harmonic products; losses of one or more key
customers; risks associated with Harmonic's international operations; dependence
on market acceptance of several 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 Harmonic's markets; risks
associated with unpredictable sales cycles; our dependence on contract
manufacturers and sole or limited source suppliers; the effect on Harmonic's
business of natural disasters; and the risks that our international sales and
support center will not provide the operational or tax benefits that we
anticipate or that its expenses exceed our plans; the risk that our stock
repurchase program will not result in material purchases of our common stock;
the possibility that the sale of our Cable Access business will not close or
will be delayed; and potential post-closing claims for indemnification in
connection with the sale of our Cable Access business. 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 Annual Report on Form 10-K
for the year ended December 31, 2011, our Quarterly Report on Form 10-Q for the
quarter ended September 28, 2012, 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.
CONTACTS:
Carolyn V. Aver Michael Bishop
Chief Financial Officer Investor Relations
Harmonic Inc. +1.408.542.2760
+1.408.542.2500
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Harmonic Inc via Thomson Reuters ONE
[HUG#1679281]
