Harmonic Announces Fourth Quarter and Year Ended 2012 Results
2013-01-29 22:05:41 -
Harmonic Announces Fourth Quarter and Year Ended 2012 Results
$75 Million Expansion of Share Repurchase Plan
SAN JOSE, Calif. - January 29, 2013 -- Harmonic Inc. (NASDAQ: HLIT), the
worldwide leader in video delivery infrastructure, announced today its
preliminary and unaudited results for the fourth quarter and year ended 2012.
Net revenue for the fourth quarter of 2012 was $133.4 million, compared with
$136.7 million for the third quarter of 2012 and $143.6 million for the fourth
quarter of 2011. For the full year 2012, net revenue was $530.5 million,
compared with $549.3 million for 2011.
The company reported GAAP net income for the fourth quarter of 2012 of $4.8
million, or $0.04 per diluted share, compared with a GAAP net loss for the third
quarter of 2012 of $8.2 million, or $(0.07) per share, and GAAP net income of
$4.3 million, or $0.04 per diluted share, in the fourth quarter of 2011. For the
full year 2012, GAAP net loss was $10.9 million, or $(0.09) per share, compared
to net income of $8.8 million, or $0.08 per diluted share, for 2011.
Non-GAAP net income for the fourth quarter of 2012 was $10.8 million, or $0.09
per diluted share, compared with $8.1 million, or $0.07 per diluted share, for
the third quarter of 2012, and $14.0 million, or $0.12 per diluted share, for
the fourth quarter of 2011. For the full year 2012, non-GAAP net income was
$29.3 million, or $0.25 per diluted share, compared with $47.5 million, or $0.41
per diluted share, for 2011. See "Use of Non-GAAP Financial Measures" and
"GAAP
to Non-GAAP Net Income (Loss) Reconciliation" below.
Harmonic reported GAAP gross margins of 49% and GAAP operating margins of 2% for
the fourth quarter of 2012, compared to 47% and 5%, respectively, for the same
period of 2011. Non-GAAP gross margins were 53% and non-GAAP operating margins
were 11% for the fourth quarter of 2012, compared to 51% and 13%, respectively,
for the same period of 2011.
As of December 31, 2012, the company had cash, cash equivalents and short-term
investments of $201.2 million, an increase from $192.0 million as of September
28, 2012. In the fourth quarter, the company generated approximately $20.6
million of cash from operations, and used approximately $8.3 million to
repurchase 1.86 million shares of common stock under its previously announced
share repurchase program.
The company also announced it will expand its existing share repurchase program
by $75 million.
"During the fourth quarter we delivered our highest-ever revenue from
international markets and our highest-ever gross margins, benefiting from the
expansion of our global customer base and particularly strong demand for
software products and follow-on licenses," said Patrick Harshman, President and
Chief Executive Officer. "This progress has been against a backdrop of slower
customer spending in US cable and European markets, and reflects Harmonic's
increasingly strong competitive position and expanding market share. During the
fiscal year we generated a record level of cash and initiated a stock buyback
program that we are now significantly expanding.
"Looking ahead, while we do not expect an immediate reversal of macro-economic
and customer investment trends, the recent CES event makes clear that new waves
of investment in video infrastructure are coming. Harmonic is in the pole
position to take advantage of these transformational market trends as they
unfold over the next 18 months, and we will press our competitive advantage and
continue to invest in new growth initiatives, including emerging market
expansion, Converged Cable Access Platform, new High Efficiency Video Codec
technology, and new UltraHD technology."
Business Outlook
Harmonic anticipates net revenue in the range of $115 million to $125 million
for the first quarter of 2013. GAAP gross margins and operating expenses for
the first quarter of 2013 are expected to be in the range of 43% to 45% and $62
million to $63 million, respectively. Non-GAAP gross margins and operating
expenses for the first quarter of 2013, which will exclude stock-based
compensation and the amortization of intangibles, are anticipated to be in the
range of 49% to 50% and $56 million to $57 million, respectively.
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, January 29, 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 +1.847. 944.7317 or
+1.866.297.6395 (passcode 33961615). The replay will be available after 6:00
p.m. Pacific at the same website address or by calling +1.630.652.3042 or
+1.888.843.7419 (passcode 33961615#).
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: our final results for the fourth quarter and year ended December
31,, 2012; the expansion of our stock repurchase program; our strategic emphasis
on expanding our global customer base; our increasingly strong competitive
position and market share; any immediate reversal of macro-economic and customer
investment trends; new waves of investment in video infrastructure; our
positioning to take advantage of transformational market trends; our continuing
press of our competitive advantage; our continuing investment in new growth
initiatives, respecting both geographic markets and new products; and net
revenue, GAAP gross margins, GAAP operating expenses, non-GAAP gross margins and
non-GAAP operating expenses 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; 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; and the risk that our stock
repurchase program will not 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
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.
Harmonic Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
December 31, 2012 December 31, 2011
------------------------- -------------------------
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 96,670 $ 90,983
Short-term investments 104,506 70,854
Accounts receivable, net 85,920 109,886
Inventories 64,270
70,649
Deferred income taxes 21,870
28,032
Prepaid expenses and other
current assets 23,636
21,474
------------------------- -------------------------
Total current assets 396,872 391,878
Property and equipment,
net 38,122
40,469
Goodwill, intangibles and
other assets 282,537 301,819
------------------------- -------------------------
Total assets $ 717,531 $ 734,166
------------------------- -------------------------
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 25,447 $ 30,537
Income taxes payable 1,797
2,290
Deferred revenue 33,235
33,095
Accrued liabilities 42,415
46,896
------------------------- -------------------------
Total current liabilities 102,894 112,818
Income taxes payable,
long-term 49,309
47,307
Deferred income taxes, -
long-term 655
Other non-current
liabilities 11,915
9,070
------------------------- -------------------------
Total liabilities 164,118 169,850
------------------------- -------------------------
Stockholders' equity:
Common stock 2,432,904 2,433,280
Accumulated deficit (1,879,026) (1,868,089)
Accumulated other
comprehensive loss (465) (875)
------------------------- -------------------------
Total stockholders' equity 553,413
564,316
------------------------- -------------------------
Total liabilities and
stockholders' equity $ 717,531 $ 734,166
------------------------- -------------------------
Condensed Consolidated Statements of Operations
(Unaudited)
Quarter ended December 31, Year ended December 31,
----------------------------- ----------------------------
2,012 2,011 2,012 2,011
-------------- ------------- -------------- ------------
(In thousands, except per share amounts)
Net revenue $ 133,427 $ 143,630 $ 530,464 $ 549,332
Cost of revenue 68,016 76,760 293,909 294,818
-------------- ------------- -------------- ------------
Gross profit 65,411 66,870 236,555 254,514
Operating
expenses:
Research and
development 26,225 25,283 106,219 102,732
Selling, general
and administrative 34,335 32,730 130,938 131,091
Amortization of
intangibles 2,157 2,230 8,705 8,918
-------------- ------------- -------------- ------------
Total operating
expenses 62,717 60,243 245,862 242,741
-------------- ------------- -------------- ------------
Income (loss)
from operations 2,694 6,627 (9,307) 11,773
Interest and
other income
(expense), net (260) (371) 222
(140)
-------------- ------------- -------------- ------------
Income (loss)
before income
taxes 2,434 6,256 (9,085) 11,633
Provision for
(benefit from)
income taxes (2,370) 1,929 1,852 2,854
-------------- ------------- -------------- ------------
Net income (loss) $ 4,804 $ 4,327 $ (10,937) $ 8,779
-------------- ------------- -------------- ------------
Net income (loss)
per share:
Basic $ 0.04 $ 0.04 $ (0.09) $
0.08
-------------- ------------- -------------- ------------
Diluted $ 0.04 $ 0.04 $ (0.09) $
0.08
-------------- ------------- -------------- ------------
Weighted average
shares:
Basic 115,097 116,123 116,457 115,175
Diluted 115,732 116,664 116,457 116,427
Harmonic Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Year ended December 31,
---------------------------------------------
2,012 2,011
----------------------- --------------------
(In thousands)
Cash flows from operating
activities:
Net income (loss) $ (10,937) $ 8,779
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Amortization of intangibles 29,204 30,420
Depreciation 15,195 13,867
Stock-based compensation 18,926 20,913
Net loss (gain) on disposal of
fixed assets (36)
671
Deferred income taxes (4,969)
(361)
Provision for doubtful accounts 1,226 2,123
Provision for excess and obsolete
inventories 3,377 3,936
Excess tax benefits from stock-
based compensation (121) (1,955)
Other non-cash adjustments, net 1,006
801
Changes in assets and
liabilities:
Accounts receivable 22,744 (10,365)
Inventories 3,003 (16,588)
Prepaid expenses and other assets (2,684) 7,924
Accounts payable (5,201) 4,750
Deferred revenue 1,334 (13,470)
Income taxes payable 1,535 (6,843)
Accrued and other liabilities (2,789) 575
----------------------- --------------------
Net cash provided by operating
activities 70,813 45,177
----------------------- --------------------
Cash flows from investing
activities:
Purchases of investments (133,778) (107,544)
Proceeds from sales and
maturities of investments 98,838 59,732
Acquisition of property and
equipment (12,609) (17,269)
Other acquisitions -
(250)
----------------------- --------------------
Net cash used in investing
activities (47,549) (65,331)
----------------------- --------------------
Cash flows from financing
activities:
Repurchase of common stock (22,639)
-
Proceeds from issuance of common
stock, net 4,819 12,701
Excess tax benefits from stock-
based compensation 121 1,955
----------------------- --------------------
Net cash (used in) provided by
financing activities (17,699) 14,656
----------------------- --------------------
Effect of exchange rate changes
on cash and cash equivalents 122
(52)
----------------------- --------------------
Net increase (decrease) in cash
and cash equivalents 5,687 (5,550)
Cash and cash equivalents at
beginning of period 90,983 96,533
----------------------- --------------------
Cash and cash equivalents at end
of period $ 96,670 $ 90,983
----------------------- --------------------
Harmonic Inc.
Revenue Information
(Unaudited)
Quarter ended December 31, Year ended December 31,
---------------------------------- ---------------------------------
2012 2011 2012 2011
---------------- ---------------- ---------------- ---------------
(In thousands, except percentages)
Product
Video
Processing $ 57,561 43% $ 64,314 45% $ 219,440 41% $ 236,624 43%
Production
and Playout 24,919 19% 25,837 18% 90,247 17% 98,842 18%
Edge and
Access 28,169 21% 32,218 22% 138,653 26% 141,880 26%
Services and
Support 22,778 17% 21,261 15% 82,124 16% 71,986 13%
--------- ------ --------- ------ --------- ------ --------- -----
Total $ 133,427 100% $ 143,630 100% $ 530,464 100% $ 549,332 100%
--------- --------- --------- ---------
Geography
United States $ 50,778 38% $ 61,647 43% $ 230,336 43% $ 244,897 45%
International 82,649 62% 81,983 57% 300,128 57% 304,435 55%
--------- ------ --------- ------ --------- ------ --------- -----
Total $ 133,427 100% $ 143,630 100% $ 530,464 100% $ 549,332 100%
--------- --------- --------- ---------
Market
Cable $ 60,398 45% $ 62,526 44% $ 253,978 48% $ 245,310 45%
Satellite and
Telco 26,159 20% 30,686 21% 107,885 20% 128,005 23%
Broadcast and
Media 46,870 35% 50,418 35% 168,601 32% 176,017 32%
--------- ------ --------- ------ --------- ------ --------- -----
Total $ 133,427 100% $ 143,630 100% $ 530,464 100% $ 549,332 100%
--------- --------- --------- ---------
Use of Non-GAAP Financial Measures
In establishing operating budgets, managing its business performance, and
setting internal measurement targets, the Company excludes 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 margin, operating expenses, net income and net
income per 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 contained in this
presentation. The non-GAAP adjustments described below have historically been
excluded from our GAAP financial measures. These adjustments are excess
facilities and severance charges 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.
Harmonic Inc.
GAAP to Non-GAAP Net Income (Loss) Reconciliation
(Unaudited)
Quarter ended December 31,
----------------------------------------------------------------------
2012 2011
----------------------------------- ----------------------------------
Gross Operating Net Gross Operating Net
Profit Expense Income Profit Expense Income
----------------------------------- ----------------------------------
(In thousands, except per share amounts)
GAAP $ 65,411 $ 62,717 $ 4,804 $ 66,870 $ 60,243 $ 4,327
Cost of
revenue
related to
stock-based
compensation
expense 695 - 695 723 -
723
Research and
development
expense
related to
stock-based
compensation
expense - (1,458) 1,458 - (1,661)
1,661
Selling,
general and
administrative
expense
related to
stock-based
compensation
expense - (2,651) 2,651 - (2,430)
2,430
Amortization
of intangibles 5,043 (2,157) 7,200 5,423 (2,230) 7,653
Discrete tax
items and
adjustments - - (5,979) - -
(2,751)
---------- ------------ ----------- --------- ------------ ----------
Non-GAAP $ 71,149 $ 56,451 $ 10,829 $ 73,016 $ 53,922 $ 14,043
---------- ------------ ----------- --------- ------------ ----------
GAAP net
income per
share - basic $ 0.04 $
0.04
----------- ----------
GAAP net
income per
share -
diluted $ 0.04 $
0.04
----------- ----------
Non-GAAP net
income per
share - basic $ 0.09 $ 0.12
----------- ----------
Non-GAAP net
income per
share -
diluted $ 0.09 $ 0.12
----------- ----------
Shares used in
per share
calculation -
basic 115,097
116,123
----------- ----------
Shares used in
per share
calculation -
diluted 115,732
116,664
----------- ----------
Shares used in
per share
calculation -
diluted, non-
GAAP 115,732
116,664
----------- ----------
Year ended December 31,
----------------------------------------------------------------------
2,012
2,011
----------------------------------- ----------------------------------
Gross Operating Net Gross Operating Net
Profit Expense Income Profit Expense Income
----------------------------------- ----------------------------------
(In thousands, except per share amounts)
GAAP $ 236,555 $ 245,862 $ (10,937) $ 254,514 $ 242,741 $ 8,779
Cost of
revenue
related to
stock-based
compensation
expense 2,996 - 2,996 3,075 -
3,075
Research and
development
expense
related to
stock-based
compensation
expense - (6,405) 6,405 - (6,926)
6,926
Selling,
general and
administrative
expense
related to
stock-based
compensation
expense - (9,525) 9,525 - (10,912)
10,912
Selling,
general and
administrative
expense
related to
excess
facility
costs,
severance
costs and
other non-
recurring
expenses - - - - (409)
409
Amortization
of intangibles 20,499 (8,705) 29,204 21,502 (8,918) 30,420
Discrete tax
items and
adjustments - - (7,911) - -
(12,989)
---------- ------------ ----------- --------- ------------ ----------
Non-GAAP $ 260,050 $ 221,227 $ 29,282 $ 279,091 $ 215,576 $ 47,532
---------- ------------ ----------- --------- ------------ ----------
GAAP net
income (loss)
per share -
basic $ (0.09) $
0.08
----------- ----------
GAAP net
income (loss)
per share -
diluted $ (0.09) $
0.08
----------- ----------
Non-GAAP net
income per
share - basic $ 0.25 $ 0.41
----------- ----------
Non-GAAP net
income per
share -
diluted $ 0.25 $ 0.41
----------- ----------
Shares used in
per share
calculation -
basic 116,457
115,175
----------- ----------
Shares used in
per share
calculation -
diluted, GAAP 116,457
116,427
----------- ----------
Shares used in
per share
calculation -
diluted, non-
GAAP 117,041
116,427
----------- ----------
CONTACTS:
Carolyn V. Aver Michael Bishop
Chief Financial Officer Investor Relations
Harmonic Inc. +1.408.542.2760
+1.408.542.2500
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Source: Harmonic Inc via Thomson Reuters ONE
[HUG#1673988]
