Exhibit 99.1
(HARMONIC LOGO)
Press Release
FOR IMMEDIATE RELEASE
CONTACTS: Robin N. Dickson Michael Newman
Chief Financial Officer Investor Relations
Harmonic Inc. StreetConnect
(408) 542-2500 (408) 542-2760
HARMONIC ANNOUNCES SECOND QUARTER RESULTS
Growing Revenue and Improving Operating Efficiencies
SUNNYVALE, CALIF.--JULY 17, 2003--Harmonic Inc. (Nasdaq: HLIT) today announced
its results for the quarter ended June 27, 2003.
For the second quarter of 2003, Harmonic reported net sales of $41.7 million,
compared to $37.0 million in the previous quarter and $56.3 million in the
second quarter of 2002. Domestic sales represented 73% of total sales for the
second quarter of 2003.
The CS division, which designs, manufactures and markets digital headend systems
for a number of markets, had divisional net sales of $27.1 million, up from
$24.0 million in the previous quarter. During the second quarter, the Company
saw increased shipments to its cable customers, particularly sales of its NSG
product for video-on-demand (VOD) services.
The BAN division, which designs, manufactures and markets fiber optic products
for broadband cable networks, had divisional net sales of $14.6 million, up from
$13.0 million in the previous quarter. The growth in BAN sales was due to
increased shipments to a number of domestic and international cable operators.
"Although our customers remain generally cautious about capital commitments, we
are seeing targeted expenditures in areas such as video-on-demand in cable and
local channel services in the satellite market," said Anthony J. Ley, Chairman,
President and Chief Executive Officer. "We are pleased with our sequential
improvement in revenue and gross margin, sustained focus on expense control and
continued development and introduction of exciting new products. During the
second quarter, Harmonic was recognized as the "Biggest Contributor to Content
Delivery" by a leading industry publication for our pioneering IP-based VOD
solutions. In addition, we introduced our enhanced NMX Digital Service
Manager(TM) to provide visual monitoring capabilities for our VOD platform."
"While the market environment is still challenging, Harmonic's product portfolio
remains strongly positioned to address the intensifying competitive pressure on
our cable, satellite and telco customers to
Harmonic Inc.
549 Baltic Way
P.O. Box 3775
Sunnyvale, CA 94089
Tel: +1.408.542.2500
Fax: +1.408.542.2511
www.harmonicinc.com
offer a combination of digital services, including video-on-demand,
high-definition video and high-speed data services. In the third quarter, we
expect to see continued revenue growth."
The GAAP net loss for the second quarter of 2003 was $11.7 million or $0.19 per
share, compared to $11.1 million or $0.19 per share for the same period of 2002.
The GAAP net loss for the second quarter of 2003 includes a non-cash charge for
the amortization of intangibles of $3.5 million, a credit relating to the sale
of previously reserved inventory of $1.0 million, and the litigation settlement
charge of $2.7 million described in a separate press release issued today.
Excluding the above charges and credit, the non-GAAP loss for the quarter was
$6.6 million, or $0.11 per share, compared to a non-GAAP loss of $5.2 million,
or $0.09 per share for the second quarter of 2002. The reconciliation between
GAAP and non-GAAP net loss is provided in the accompanying tables.
The Company will host a conference call to discuss its second quarter financial
results today at 2:00 p.m. Pacific (5:00 p.m. Eastern). A listen-only broadcast
of the conference call can be accessed on the Company's website at:
www.harmonicinc.com or by calling +1-212-748-2800 (Reservation No. 21090932).
The replay will be available at the same website address or by calling
+1-402-977-9140 (Reservation No. 21090932).
ABOUT HARMONIC INC.
Harmonic Inc. is a leading provider of digital video, broadband optical
networking and IP delivery systems to cable, satellite, telecom and broadcast
network operators. Harmonic's open standards-based solutions for the headend
through the last mile enable customers to develop new revenue sources and a
competitive advantage by offering powerful interactive video, voice and data
services such as video-on-demand, high definition digital television, telephony
and Internet access.
Harmonic (Nasdaq: HLIT) is headquartered in Sunnyvale, California with R&D,
sales and system integration centers worldwide. The Company's customers,
including many of the world's largest communications providers, deliver services
in virtually every country. Visit www.harmonicinc.com for more information.
This press release contains forward-looking statements within the meaning of
Section 27(a) of the Securities Act of 1933 and Section 21(e) of the Securities
Exchange Act of 1934, including statements related to our competitive position
in the worldwide cable market, our belief that we will continue to see targeted
expenditures in areas such as video-on-demand in cable and local channel
services in the satellite market, our belief that our cable, satellite and telco
customers will need to upgrade their networks in order to keep pace with
intensifying demand for a combination of digital services, including,
video-on-demand, high-definition video and high-speed data services, our
expectation that we will see continued revenue growth in the third quarter, and
our belief that our product portfolio remains well-positioned to capitalize on
long-term opportunities across a wide range of broadband markets. Our
expectations and beliefs 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 delays or decreases in capital spending in the cable and satellite
industry, customer concentration and consolidation, general economic conditions,
our need for additional financing, market acceptance of new or existing Harmonic
products,
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losses of one or more key customers, risks associated with Harmonic's
international operations, inventory management problems, disruptions in
scheduled payments of litigation settlement amounts, the effect of competition,
difficulties associated with rapid technological changes in Harmonic's markets,
the need to introduce new and enhanced products, and risks associated with a
cyclical and unpredictable sales cycle. 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 its Annual Report filed on Form 10-K for the
year ended December 31, 2002 and its subsequent quarterly reports on Form 10-Q
and current reports on Form 8-K. Harmonic does not undertake to update any
forward-looking statements.
EDITOR'S NOTE: PRODUCT AND COMPANY NAMES USED HERE ARE TRADEMARKS OR
REGISTERED TRADEMARKS OF THEIR RESPECTIVE COMPANIES.
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HARMONIC INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
JUNE 27, 2003 DECEMBER 31, 2002
------------- -----------------
(UNAUDITED)
Assets
Current assets:
Cash and cash equivalents $ 22,867 $ 21,542
Short-term investments 13,443 27,616
Accounts receivable, net 34,775 25,380
Inventories 21,644 25,904
Prepaid expenses and other assets 3,554 5,494
----------- -----------
Total current assets 96,283 105,936
Property and equipment, net 27,295 32,456
Intangibles and other assets 28,378 35,362
----------- -----------
$ 151,956 $ 173,754
=========== ===========
Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt $ 1,581 $ 1,862
Accounts payable 9,578 7,258
Income taxes payable 7,179 6,900
Accrued liabilities 59,336 58,670
----------- -----------
Total current liabilities 77,674 74,690
----------- -----------
Long-term debt, less current portion 511 710
Accrued excess facilities costs 32,407 34,754
Other non-current liabilities 1,501 1,417
----------- -----------
Total liabilities 112,093 111,571
----------- -----------
Stockholders' equity:
Common stock 1,964,180 1,963,294
Accumulated deficit (1,924,474) (1,901,125)
Accumulated other comprehensive income 157 14
----------- -----------
Total stockholders' equity 39,863 62,183
----------- -----------
$ 151,956 $ 173,754
=========== ===========
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HARMONIC INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------------ ---------------------------------
JUNE 27, 2003 JUNE 28, 2002 JUNE 27, 2003 JUNE 28, 2002
------------- ------------- ------------- -------------
Net sales $ 41,653 $ 56,309 $ 78,694 $ 110,341
Cost of sales 28,901 37,074 55,195 75,343
--------- --------- --------- ---------
Gross profit 12,752 19,235 23,499 34,998
--------- --------- --------- ---------
Operating expenses:
Research and development 8,431 10,795 16,934 21,914
Selling, general and administrative 14,408 17,026 26,471 32,347
Amortization of intangibles 1,933 2,828 3,866 5,656
--------- --------- --------- ---------
Total operating expenses 24,772 30,649 47,271 59,917
--------- --------- --------- ---------
Loss from operations (12,020) (11,414) (23,772) (24,919)
Interest and other income 438 290 623 283
--------- --------- --------- ---------
Loss before income taxes (11,582) (11,124) (23,149) (24,636)
Provision for income taxes 100 -- 200 500
--------- --------- --------- ---------
Net loss $ (11,682) $ (11,124) $ (23,349) $ (25,136)
========= ========= ========= =========
Net loss per share
Basic and diluted $ (0.19) $ (0.19) $ (0.39) $ (0.42)
========= ========= ========= =========
Weighted average shares
Basic and diluted 60,462 59,552 60,457 59,513
========= ========= ========= =========
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HARMONIC INC.
NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------------ -----------------------------------
JUNE 27, 2003 JUNE 28, 2002 JUNE 27, 2003 JUNE 28, 2002
------------- ------------- ------------- -------------
Net sales $ 41,653 $ 56,309 $ 78,694 $ 110,341
Cost of sales 28,406 36,751 54,217 71,998
--------- --------- --------- ---------
Gross profit 13,247 19,558 24,477 38,343
--------- --------- --------- ---------
Operating expenses:
Research and development 8,431 10,795 16,934 21,914
Selling, general and administrative 11,738 14,278 23,801 29,599
--------- --------- --------- ---------
Total operating expenses 20,169 25,073 40,735 51,513
--------- --------- --------- ---------
Loss from operations (6,922) (5,515) (16,258) (13,170)
Interest and other income 438 290 623 283
--------- --------- --------- ---------
Loss before income taxes (6,484) (5,225) (15,635) (12,887)
Provision for income taxes 100 -- 200 500
--------- --------- --------- ---------
Net loss $ (6,584) $ (5,225) $ (15,835) $ (13,387)
========= ========= ========= =========
Net loss per share
Basic and diluted $ (0.11) $ (0.09) $ (0.26) $ (0.22)
========= ========= ========= =========
Weighted average shares
Basic and diluted 60,462 59,552 60,457 59,513
========= ========= ========= =========
(1) These Non-GAAP Condensed Consolidated Statements of Operations are provided
to enhance overall understanding of our current financial performance and
our prospects for the future. The presentation of this 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 table reconciling the
Non-GAAP net loss to the GAAP net loss follows below.
HARMONIC INC.
NON-GAAP TO GAAP LOSS RECONCILIATION
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------- -------------------------------
JUNE 27, 2003 JUNE 28, 2002 JUNE 27, 2003 JUNE 28, 2002
------------- ------------- ------------- -------------
Non-GAAP net loss $ (6,584) $ (5,225) $ (15,835) $ (13,387)
Items charged to cost of sales:
Amortization of intangibles (1,540) (3,022) (3,080) (6,044)
Realized margin on reserved product
sold 1,045 2,900 2,102 2,900
Provision for probable losses on
Adelphia deferred cost of sales -- (201) -- (201)
------------ ----------- ------------ -----------
Total of charges to cost of sales (495) (323) (978) (3,345)
------------ ----------- ------------ -----------
Items charged to operating expenses:
Amortization of intangibles (1,933) (2,828) (3,866) (5,656)
Loss on litigation settlement (2,670) (2,670)
Provision for probable losses on
Adelphia account receivables -- (2,748) -- (2,748)
------------ ----------- ------------ -----------
Total of charges to operating
expenses (4,603) (5,576) (6,536) (8,404)
------------ ----------- ------------ -----------
GAAP net loss $ (11,682) $ (11,124) $ (23,349) $ (25,136)
============ =========== ============ ===========
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