Exhibit 99.1
HARMONIC ANNOUNCES FIRST QUARTER RESULTS
Year-Over-Year Revenue Increased 49%
SUNNYVALE, CALIF. -- APRIL 22, 2004 -- Harmonic Inc. (Nasdaq: HLIT) today
announced its results for the quarter ended April 2, 2004.
For the first quarter of 2004, the Company reported net sales of $55.1 million,
up 49% from $37.0 million in the first quarter of 2003. The strong
year-over-year revenue growth reflected increased shipments to cable and
satellite customers worldwide. International sales represented 33% of total
sales for the first quarter of 2004, up from 30% in the previous quarter, due to
improvements in certain international markets and the expected seasonal slowdown
in domestic sales in the first quarter.
The Company's CS division, which designs, manufactures and markets digital
headend systems for a number of markets, had divisional net sales of $35.8
million in the first quarter of 2004, up from $24.0 million in the same period
of 2003. The BAN division, which designs, manufactures and markets fiber optic
products primarily for broadband cable networks, had divisional net sales of
$19.3 million in the first quarter of 2004, up from $13.0 million in the same
period of 2003.
"We are pleased with our strong sales improvement in the first quarter, which is
typically our slowest period for the year," said Anthony J. Ley, Chairman,
President and Chief Executive Officer. "Our domestic cable customers continue to
gradually deploy video-on-demand (VOD), high-definition (HD) programming, more
digital channels and IP services. We are also encouraged by the growing interest
in VOD and HD among our international cable customers in Asia and Europe, as
well as our satellite customers' plans to offer more HD and local channels."
"While the timing of customer deployments remains difficult to predict, we
continue to see intensifying competition between cable and satellite operators,
which drives the need for both more bandwidth capacity and better bandwidth
management. Moreover, we believe that the telcos are continuing to explore how
they can best offer a competitive array of quality digital video services in the
coming years. We believe increasing competition between operators, combined with
the ever-increasing bandwidth and technical requirements of new residential and
business services, will fuel growing demand for our fiber optic and digital
products in 2004 and beyond."
The GAAP net loss for the first quarter of 2004 was $2.6 million or $0.04 per
share, compared to a net loss of $11.7 million or $0.19 per share for the same
period of 2003. The GAAP results for the first quarter includes a credit
relating to the sale of previously reserved inventory of $0.7 million. Excluding
the benefits described above and the effects of non-cash accounting charges for
the amortization of intangibles, the non-GAAP net income for the first quarter
of 2003 was $0.2 million or $0.00 per share. This compares to a non-GAAP net
loss of $9.3 million or $0.15 per share for the same period of 2003.
At the end of the first quarter of 2004, the Company had cash, cash equivalents
and short-term investments of $108.4 million, compared to $112.6 million at the
end of 2003.
Harmonic's conference call regarding its first quarter 2004 results will be held
today at 2:00 p.m. Pacific (5:00 p.m. Eastern) on April 22, 2004. A listen-only
broadcast of the conference call can be accessed on the Company's website at
www.harmonicinc.com or by calling +1 - 415 - 908 - 4707 (Reservation No.
21180558). The replay will be available after 5:00 p.m. on April 22, 2004 at the
same website address or by calling +1 - 402 - 977 - 9140 (Reservation No.
21180558).
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 domestic
cable customers' gradual deployment of VOD, HD programming, more digital
channels and IP services; growing interest in VOD and HD among our
international cable customers in Asia and Europe; our satellite customers'
plans to offer more HD and local channels; intensifying competition between
cable and satellite operators, which drives the need for both more bandwidth
capacity and better bandwidth management; our belief that the telcos are
continuing to explore how they can best offer a competitive array of quality
digital video services in the coming years; our belief that increasing
competition between operators, combined with the ever-increasing bandwidth
and technical requirements of new residential and business services, will
fuel growing demand for our fiber optic and digital products in 2004 and
beyond. 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, market acceptance of new or existing Harmonic
products, losses of one or more key customers, risks associated with
Harmonic's international operations, inventory management problems, 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, 2003, its quarterly reports on Form 10-Q and its 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.
HARMONIC INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
APRIL 2, 2004 DECEMBER 31, 2003
------------- -----------------
(UNAUDITED)
Assets
Current assets:
Cash and cash equivalents $ 36,826 $ 41,877
Short-term investments 71,540 70,720
Accounts receivable, net 32,360 38,528
Inventories 28,323 22,425
Prepaid expenses and other current assets 6,134 6,196
----------- -----------
Total current assets 175,183 179,746
Property and equipment, net 22,555 23,458
Intangibles and other assets 18,037 21,522
----------- -----------
$ 215,775 $ 224,726
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Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt $ 882 $ 1,027
Accounts payable 15,180 14,863
Income taxes payable 6,924 6,935
Deferred revenue 6,986 11,712
Accrued liabilities 46,968 49,820
----------- -----------
Total current liabilities 76,940 84,357
----------- -----------
Long-term debt, less current portion 581 629
Accrued excess facilities costs 27,603 28,627
Other non-current liabilities 5,231 4,952
----------- -----------
Total liabilities 110,355 118,565
----------- -----------
Stockholders' equity:
Common stock 2,038,559 2,036,593
Accumulated deficit (1,933,135) (1,930,558)
Accumulated other comprehensive income (4) 126
----------- -----------
Total stockholders' equity 105,420 106,161
----------- -----------
$ 215,775 $ 224,726
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HARMONIC INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED
-----------------------------
APRIL 2, 2004 MARCH 28, 2003
------------- --------------
Net sales $ 55,106 $ 37,041
Cost of sales 33,219 26,294
-------- --------
Gross profit 21,887 10,747
-------- --------
Operating expenses:
Research and development 8,850 8,503
Selling, general and administrative 13,994 12,063
Amortization of intangibles 1,933 1,933
-------- --------
Total operating expenses 24,777 22,499
-------- --------
Loss from operations (2,890) (11,752)
Interest and other income, net 413 185
-------- --------
Loss before income taxes (2,477) (11,567)
Provision for income taxes 100 100
-------- --------
Net loss $ (2,577) $(11,667)
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Net loss per share
Basic $ (0.04) $ (0.19)
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Diluted $ (0.04) $ (0.19)
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Weighted average shares
Basic 71,713 60,456
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Diluted 71,713 60,456
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HARMONIC INC.
NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED
------------------------------
APRIL 2, 2004 MARCH 28, 2003
------------- --------------
Net sales $ 55,106 $ 37,041
Cost of sales 32,346 25,811
-------- --------
Gross profit 22,760 11,230
-------- --------
Operating expenses:
Research and development 8,850 8,503
Selling, general and administrative 13,994 12,063
-------- --------
Total operating expenses 22,844 20,566
-------- --------
Non-GAAP loss from operations (84) (9,336)
Interest and other income, net 413 185
-------- --------
Non-GAAP income/(loss) before income taxes 329 (9,151)
Provision for income taxes 100 100
-------- --------
Non-GAAP net income/(loss) $ 229 $ (9,251)
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Non-GAAP net income(loss) per share
Basic $ 0.00 $ (0.15)
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Diluted $ 0.00 $ (0.15)
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Weighted average shares
Basic 71,713 60,456
======== ========
Diluted 73,346 60,456
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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 income/(loss) to the GAAP net income/(loss) follows below.
HARMONIC INC.
NON-GAAP TO GAAP INCOME (LOSS) RECONCILIATION
(UNAUDITED)
THREE MONTHS ENDED
-----------------------------
(In thousands) APRIL 2, 2004 MARCH 28, 2003
-------------- ------------- --------------
Non-GAAP net income (loss) $ 229 $ (9,251)
Items charged to cost of sales:
Amortization of intangibles (1,540) (1,540)
Realized margin on reserved product sold 667 1,057
-------- --------
Total of charges to cost of sales (873) (483)
-------- --------
Items charged to operating expenses:
Amortization of intangibles (1,933) (1,933)
-------- --------
Total of charges to operating expenses (1,933) (1,933)
-------- --------
GAAP net loss $ (2,577) $(11,667)
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