ý
|
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
¨
|
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
Delaware
|
77-0201147
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification Number)
|
Large accelerated filer
|
¨
|
Accelerated filer
|
ý
|
|
|
|
|
Non-accelerated filer
|
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
¨
|
|
|
|
|
Emerging growth company
|
¨
|
|
|
|
|
|
|
|
|
|
|
|
September 29, 2017
|
|
December 31, 2016
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
50,039
|
|
|
$
|
55,635
|
|
Short-term investments
|
—
|
|
|
6,923
|
|
||
Accounts receivable, net
|
71,582
|
|
|
86,765
|
|
||
Inventories
|
31,754
|
|
|
41,193
|
|
||
Prepaid expenses and other current assets
|
22,682
|
|
|
26,319
|
|
||
Total current assets
|
176,057
|
|
|
216,835
|
|
||
Property and equipment, net
|
30,731
|
|
|
32,164
|
|
||
Goodwill
|
241,932
|
|
|
237,279
|
|
||
Intangibles, net
|
23,316
|
|
|
29,231
|
|
||
Other long-term assets
|
39,926
|
|
|
38,560
|
|
||
Total assets
|
$
|
511,962
|
|
|
$
|
554,069
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Other debts and capital lease obligations, current
|
$
|
7,434
|
|
|
$
|
7,275
|
|
Accounts payable
|
31,839
|
|
|
28,892
|
|
||
Income taxes payable
|
1,411
|
|
|
1,166
|
|
||
Deferred revenue
|
52,811
|
|
|
52,414
|
|
||
Accrued and other current liabilities
|
52,828
|
|
|
55,150
|
|
||
Total current liabilities
|
146,323
|
|
|
144,897
|
|
||
Convertible notes, long-term
|
107,318
|
|
|
103,259
|
|
||
Other debts and capital lease obligations, long-term
|
15,439
|
|
|
13,915
|
|
||
Income taxes payable, long-term
|
591
|
|
|
2,926
|
|
||
Deferred tax liabilities, long-term
|
327
|
|
|
—
|
|
||
Other non-current liabilities
|
21,366
|
|
|
18,431
|
|
||
Total liabilities
|
291,364
|
|
|
283,428
|
|
||
Commitments and contingencies (Note 18)
|
|
|
|
||||
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; 81,606 and 78,456 shares issued and outstanding at September 29, 2017 and December 31, 2016, respectively
|
82
|
|
|
78
|
|
||
Additional paid-in capital
|
2,267,213
|
|
|
2,254,055
|
|
||
Accumulated deficit
|
(2,045,967
|
)
|
|
(1,976,222
|
)
|
||
Accumulated other comprehensive loss
|
(730
|
)
|
|
(7,270
|
)
|
||
Total stockholders’ equity
|
220,598
|
|
|
270,641
|
|
||
Total liabilities and stockholders’ equity
|
$
|
511,962
|
|
|
$
|
554,069
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 29, 2017
|
|
September 30, 2016
|
|
September 29, 2017
|
|
September 30, 2016
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Product
|
$
|
58,161
|
|
|
$
|
70,285
|
|
|
$
|
158,657
|
|
|
$
|
205,342
|
|
Services
|
33,853
|
|
|
31,121
|
|
|
98,615
|
|
|
87,467
|
|
||||
Total net revenue
|
92,014
|
|
|
101,406
|
|
|
257,272
|
|
|
292,809
|
|
||||
Cost of revenue:
|
|
|
|
|
|
|
|
||||||||
Product
|
27,736
|
|
|
34,460
|
|
|
85,843
|
|
|
105,698
|
|
||||
Services
|
17,253
|
|
|
15,583
|
|
|
50,181
|
|
|
44,054
|
|
||||
Total cost of revenue
|
44,989
|
|
|
50,043
|
|
|
136,024
|
|
|
149,752
|
|
||||
Total gross profit
|
47,025
|
|
|
51,363
|
|
|
121,248
|
|
|
143,057
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
21,289
|
|
|
24,202
|
|
|
73,226
|
|
|
74,272
|
|
||||
Selling, general and administrative
|
37,121
|
|
|
36,112
|
|
|
104,377
|
|
|
105,498
|
|
||||
Amortization of intangibles
|
793
|
|
|
3,009
|
|
|
2,347
|
|
|
9,606
|
|
||||
Restructuring and related charges
|
2,028
|
|
|
(27
|
)
|
|
4,084
|
|
|
4,488
|
|
||||
Total operating expenses
|
61,231
|
|
|
63,296
|
|
|
184,034
|
|
|
193,864
|
|
||||
Loss from operations
|
(14,206
|
)
|
|
(11,933
|
)
|
|
(62,786
|
)
|
|
(50,807
|
)
|
||||
Interest expense, net
|
(2,794
|
)
|
|
(2,734
|
)
|
|
(8,064
|
)
|
|
(7,806
|
)
|
||||
Other expense, net
|
(498
|
)
|
|
(328
|
)
|
|
(1,828
|
)
|
|
(5
|
)
|
||||
Loss on impairment of long-term investment
|
—
|
|
|
(1,259
|
)
|
|
—
|
|
|
(2,735
|
)
|
||||
Loss before income taxes
|
(17,498
|
)
|
|
(16,254
|
)
|
|
(72,678
|
)
|
|
(61,353
|
)
|
||||
(Benefit from) provision for income taxes
|
(1,915
|
)
|
|
(242
|
)
|
|
(1,568
|
)
|
|
518
|
|
||||
Net loss
|
$
|
(15,583
|
)
|
|
$
|
(16,012
|
)
|
|
$
|
(71,110
|
)
|
|
$
|
(61,871
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net loss per share:
|
|
|
|
|
|
|
|
||||||||
Basic and diluted
|
$
|
(0.19
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
(0.88
|
)
|
|
$
|
(0.80
|
)
|
Shares used in per share calculation:
|
|
|
|
|
|
|
|
||||||||
Basic and diluted
|
81,445
|
|
|
78,092
|
|
|
80,618
|
|
|
77,475
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 29, 2017
|
|
September 30, 2016
|
|
September 29, 2017
|
|
September 30, 2016
|
||||||||
Net loss
|
$
|
(15,583
|
)
|
|
$
|
(16,012
|
)
|
|
$
|
(71,110
|
)
|
|
$
|
(61,871
|
)
|
Other comprehensive income (loss) before tax:
|
|
|
|
|
|
|
|
||||||||
Change in unrealized gain on cash flow hedges:
|
|
|
|
|
|
|
|
||||||||
Unrealized gain arising during the period
|
—
|
|
|
121
|
|
|
—
|
|
|
279
|
|
||||
(Gain) loss reclassified into earnings
|
—
|
|
|
(47
|
)
|
|
—
|
|
|
53
|
|
||||
|
—
|
|
|
74
|
|
|
—
|
|
|
332
|
|
||||
Change in unrealized gain (loss) on available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Unrealized (loss) gain arising during the period
|
8
|
|
|
(1,208
|
)
|
|
(605
|
)
|
|
(1,178
|
)
|
||||
Loss reclassified into earnings
|
—
|
|
|
1,259
|
|
|
—
|
|
|
2,735
|
|
||||
|
8
|
|
|
51
|
|
|
(605
|
)
|
|
1,557
|
|
||||
Change in foreign currency translation adjustments
|
2,265
|
|
|
523
|
|
|
7,147
|
|
|
(154
|
)
|
||||
Other comprehensive income before tax
|
2,273
|
|
|
648
|
|
|
6,542
|
|
|
1,735
|
|
||||
Less: Provision for (benefit from) income taxes
|
—
|
|
|
(3
|
)
|
|
2
|
|
|
20
|
|
||||
Other comprehensive income, net of tax
|
2,273
|
|
|
651
|
|
|
6,540
|
|
|
1,715
|
|
||||
Total comprehensive loss
|
$
|
(13,310
|
)
|
|
$
|
(15,361
|
)
|
|
$
|
(64,570
|
)
|
|
$
|
(60,156
|
)
|
|
Nine months ended
|
||||||
|
September 29, 2017
|
|
September 30, 2016
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(71,110
|
)
|
|
$
|
(61,871
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Amortization of intangibles
|
6,232
|
|
|
12,711
|
|
||
Depreciation
|
11,045
|
|
|
13,198
|
|
||
Stock-based compensation
|
11,107
|
|
|
8,542
|
|
||
Amortization of discount on convertible debt and issuance cost
|
4,060
|
|
|
3,669
|
|
||
Restructuring, asset impairment and loss on retirement of fixed assets
|
565
|
|
|
1,476
|
|
||
Amortization of non-cash warrant
|
38
|
|
|
—
|
|
||
Loss on impairment of long-term investment
|
—
|
|
|
2,735
|
|
||
Foreign currency adjustments
|
1,795
|
|
|
(911
|
)
|
||
Provision for excess and obsolete inventories
|
5,578
|
|
|
6,246
|
|
||
Allowance for doubtful accounts and returns
|
4,309
|
|
|
1,222
|
|
||
Other non-cash adjustments, net
|
298
|
|
|
251
|
|
||
Changes in operating assets and liabilities, net of effects of acquisition:
|
|
|
|
||||
Accounts receivable
|
11,367
|
|
|
(12,869
|
)
|
||
Inventories
|
6,188
|
|
|
2,225
|
|
||
Prepaid expenses and other assets
|
6,702
|
|
|
(5,938
|
)
|
||
Accounts payable
|
2,129
|
|
|
2,505
|
|
||
Deferred revenue
|
(1,098
|
)
|
|
20,038
|
|
||
Income taxes payable
|
(2,122
|
)
|
|
(827
|
)
|
||
Accrued and other liabilities
|
(3,053
|
)
|
|
(5,040
|
)
|
||
Net cash used in operating activities
|
(5,970
|
)
|
|
(12,638
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Acquisition of business, net of cash acquired
|
—
|
|
|
(75,669
|
)
|
||
Proceeds from maturities of investments
|
3,106
|
|
|
18,692
|
|
||
Proceeds from sales of investments
|
3,792
|
|
|
—
|
|
||
Purchases of property and equipment
|
(9,075
|
)
|
|
(11,423
|
)
|
||
Net cash used in investing activities
|
(2,177
|
)
|
|
(68,400
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Payment of convertible debt issuance costs
|
—
|
|
|
(582
|
)
|
||
Proceeds from other debts and capital leases
|
6,344
|
|
|
5,968
|
|
||
Repayment of other debts and capital leases
|
(7,008
|
)
|
|
(8,038
|
)
|
||
Proceeds from common stock issued to employees
|
4,697
|
|
|
3,736
|
|
||
Payment of tax withholding obligations related to net share settlements of restricted stock units
|
(2,757
|
)
|
|
(1,313
|
)
|
||
Net cash provided by (used in) financing activities
|
1,276
|
|
|
(229
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
1,275
|
|
|
(182
|
)
|
||
Net decrease in cash and cash equivalents
|
(5,596
|
)
|
|
(81,449
|
)
|
||
Cash and cash equivalents at beginning of period
|
55,635
|
|
|
126,190
|
|
||
Cash and cash equivalents at end of period
|
$
|
50,039
|
|
|
$
|
44,741
|
|
Assets:
|
|
||
Cash and cash equivalents
|
$
|
6,843
|
|
Accounts receivable, net
|
14,933
|
|
|
Inventories
|
3,462
|
|
|
Prepaid expenses and other current assets
|
2,412
|
|
|
Property and equipment, net
|
9,942
|
|
|
French R&D tax credit receivables
(1)
|
26,421
|
|
|
Other long-term assets
|
2,134
|
|
|
Total assets
|
$
|
66,147
|
|
Liabilities:
|
|
||
Other debts and capital lease obligations, current
|
8,362
|
|
|
Accounts payable
|
12,494
|
|
|
Deferred revenue
|
2,504
|
|
|
Accrued and other current liabilities
|
18,365
|
|
|
Other debts and capital lease obligations, long-term
|
16,087
|
|
|
Other non-current liabilities
|
6,467
|
|
|
Deferred tax liabilities
|
2,126
|
|
|
Total liabilities
|
$
|
66,405
|
|
|
|
||
Goodwill
|
41,670
|
|
|
Intangibles
|
41,100
|
|
|
Total purchase consideration
|
$
|
82,512
|
|
|
Estimated Useful Life (in years)
|
|
Fair Value
|
||
Backlog
|
6 months
|
|
$
|
3,600
|
|
Developed technology
|
4 years
|
|
21,700
|
|
|
Customer relationships
|
5 years
|
|
15,200
|
|
|
Trade name
|
4 years
|
|
600
|
|
|
|
|
|
$
|
41,100
|
|
|
|
Acquisition-related
|
|
Integration-related
|
||||||||||||||||||||
|
|
Three months ended
|
|
Nine months ended
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||||||
|
|
September 30, 2016
|
|
September 29, 2017
|
|
September 30, 2016
|
|
September 29, 2017
|
|
September 30, 2016
|
||||||||||||||
Product cost of revenue
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
119
|
|
|
$
|
342
|
|
|
$
|
610
|
|
Research and development
|
|
—
|
|
|
—
|
|
|
—
|
|
|
152
|
|
|
7
|
|
|
702
|
|
||||||
Selling, general and administrative
|
|
534
|
|
|
3,855
|
|
|
117
|
|
|
4,365
|
|
|
2,385
|
|
|
6,502
|
|
||||||
Total acquisition- and integration-related expenses in operating expenses
|
|
534
|
|
|
3,855
|
|
|
117
|
|
|
4,636
|
|
|
2,734
|
|
|
7,814
|
|
||||||
Interest expense, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
98
|
|
|
—
|
|
|
98
|
|
||||||
Total acquisition- and integration-related expenses
|
|
$
|
534
|
|
|
$
|
3,855
|
|
|
$
|
117
|
|
|
$
|
4,734
|
|
|
$
|
2,734
|
|
|
$
|
7,912
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
As of December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
$
|
6,928
|
|
|
$
|
—
|
|
|
$
|
(5
|
)
|
|
$
|
6,923
|
|
Total short-term investments
|
$
|
6,928
|
|
|
$
|
—
|
|
|
$
|
(5
|
)
|
|
$
|
6,923
|
|
|
|
September 29, 2017
|
|
December 31, 2016
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
||||
Purchase
|
|
$
|
12,925
|
|
|
$
|
4,056
|
|
Sell
|
|
$
|
1,501
|
|
|
$
|
11,157
|
|
|
|
|
|
Asset Derivatives
|
|
|
|
Derivative Liabilities
|
||||||||||||
|
|
Balance Sheet Location
|
|
September 29, 2017
|
|
December 31, 2016
|
|
Balance Sheet Location
|
|
September 29, 2017
|
|
December 31, 2016
|
||||||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
|
Prepaid expenses and other current assets
|
|
$
|
13
|
|
|
$
|
54
|
|
|
Accrued Liabilities
|
|
$
|
45
|
|
|
$
|
40
|
|
Total derivatives
|
|
|
|
$
|
13
|
|
|
$
|
54
|
|
|
|
|
$
|
45
|
|
|
$
|
40
|
|
|
|
|
|
|
|
|
|
Gross Amounts of Derivatives Not Offset in the Condensed Consolidated Balance Sheets
|
|
|
||||||||||||
|
|
Gross Amounts of Derivatives
|
|
Gross Amounts of Derivatives Offset in the Condensed Consolidated Balance Sheets
|
|
Net Amounts of Derivatives Presented in the Condensed Consolidated Balance Sheets
|
|
Financial Instrument
|
|
Cash Collateral Pledged
|
|
Net Amount
|
||||||||||
Derivative Assets
|
|
$
|
13
|
|
|
—
|
|
|
$
|
13
|
|
|
$
|
(6
|
)
|
|
—
|
|
|
$
|
7
|
|
Derivative Liabilities
|
|
$
|
45
|
|
|
—
|
|
|
$
|
45
|
|
|
$
|
(6
|
)
|
|
—
|
|
|
$
|
39
|
|
•
|
Level 1 — Observable inputs that reflect quoted prices for identical assets or liabilities in active markets.
|
•
|
Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. The Company primarily uses broker quotes for valuation of its short-term investments. The forward exchange contracts are classified as Level 2 because they are valued using quoted market prices and other observable data for similar instruments in an active market.
|
•
|
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
As of September 29, 2017
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
246
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
246
|
|
Prepaids and other current assets
|
|
|
|
|
|
|
|
||||||||
Derivative assets
|
—
|
|
|
13
|
|
|
—
|
|
|
13
|
|
||||
Other assets
|
|
|
|
|
|
|
|
||||||||
Long-term investment
|
200
|
|
|
—
|
|
|
—
|
|
|
200
|
|
||||
Total assets measured and recorded at fair value
|
$
|
446
|
|
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
459
|
|
Accrued and other current liabilities
|
|
|
|
|
|
|
|
||||||||
Derivative liabilities
|
$
|
—
|
|
|
$
|
45
|
|
|
$
|
—
|
|
|
$
|
45
|
|
Accrued TVN VDP, current portion
|
—
|
|
|
—
|
|
|
3,519
|
|
|
3,519
|
|
||||
Other non-current liabilities
|
|
|
|
|
|
|
|
||||||||
Accrued TVN VDP, long-term portion
|
—
|
|
|
—
|
|
|
2,485
|
|
|
2,485
|
|
||||
Total liabilities measured and recorded at fair value
|
$
|
—
|
|
|
$
|
45
|
|
|
$
|
6,004
|
|
|
$
|
6,049
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
As of December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
8,301
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,301
|
|
Corporate bonds
|
—
|
|
|
6,923
|
|
|
—
|
|
|
6,923
|
|
||||
Prepaids and other current assets
|
|
|
|
|
|
|
|
||||||||
Derivative assets
|
—
|
|
|
54
|
|
|
—
|
|
|
54
|
|
||||
Other assets
|
|
|
|
|
|
|
|
||||||||
Long-term investment
|
809
|
|
|
—
|
|
|
—
|
|
|
809
|
|
||||
Total assets measured and recorded at fair value
|
$
|
9,110
|
|
|
$
|
6,977
|
|
|
$
|
—
|
|
|
$
|
16,087
|
|
Accrued and other current liabilities
|
|
|
|
|
|
|
|
||||||||
Derivative liabilities
|
$
|
—
|
|
|
$
|
40
|
|
|
$
|
—
|
|
|
$
|
40
|
|
Accrued TVN VDP, current portion
|
—
|
|
|
—
|
|
|
6,597
|
|
|
6,597
|
|
||||
Other non-current liabilities
|
|
|
|
|
|
|
|
||||||||
Accrued TVN VDP, long-term portion
|
—
|
|
|
—
|
|
|
3,053
|
|
|
3,053
|
|
||||
Total liabilities measured and recorded at fair value
|
$
|
—
|
|
|
$
|
40
|
|
|
$
|
9,650
|
|
|
$
|
9,690
|
|
|
September 29, 2017
|
|
December 31, 2016
|
||||
Accounts receivable, net:
|
|
|
|
||||
Accounts receivable
|
$
|
77,320
|
|
|
$
|
91,596
|
|
Less: allowances for doubtful accounts, returns and discounts
|
(5,738
|
)
|
|
(4,831
|
)
|
||
Total
|
$
|
71,582
|
|
|
$
|
86,765
|
|
|
September 29, 2017
|
|
December 31, 2016
|
||||
Prepaid expenses and other current assets:
|
|
|
|
||||
Deferred cost of revenue
|
$
|
6,217
|
|
|
$
|
6,856
|
|
French R&D tax credits receivable
(1)
|
6,475
|
|
|
5,895
|
|
||
Prepaid maintenance, royalty, rent, property taxes and value added tax
|
4,942
|
|
|
5,526
|
|
||
Prepaid customer incentive
(2)
|
1,124
|
|
|
1,162
|
|
||
Restricted cash
(3)
|
803
|
|
|
731
|
|
||
Other
|
3,121
|
|
|
6,149
|
|
||
Total
|
$
|
22,682
|
|
|
$
|
26,319
|
|
|
September 29, 2017
|
|
December 31, 2016
|
||||
Inventories:
|
|
|
|
||||
Raw materials
|
$
|
3,825
|
|
|
$
|
9,889
|
|
Work-in-process
|
1,290
|
|
|
2,318
|
|
||
Finished goods
|
14,146
|
|
|
17,776
|
|
||
Service-related spares
|
12,493
|
|
|
11,210
|
|
||
Total
|
$
|
31,754
|
|
|
$
|
41,193
|
|
|
September 29, 2017
|
|
December 31, 2016
|
||||
Property and equipment, net:
|
|
|
|
||||
Machinery and equipment
|
$
|
86,971
|
|
|
$
|
97,989
|
|
Capitalized software
|
34,496
|
|
|
34,519
|
|
||
Leasehold improvements
|
14,745
|
|
|
14,455
|
|
||
Furniture and fixtures
|
6,797
|
|
|
8,993
|
|
||
Property and equipment, gross
|
143,009
|
|
|
155,956
|
|
||
Less: accumulated depreciation and amortization
|
(112,278
|
)
|
|
(123,792
|
)
|
||
Total
|
$
|
30,731
|
|
|
$
|
32,164
|
|
|
September 29, 2017
|
|
December 31, 2016
|
||||
Accrued and other current liabilities:
|
|
|
|
||||
Accrued employee compensation and related expenses
|
$
|
14,866
|
|
|
$
|
19,377
|
|
Accrued TVN VDP, current
(1)
|
3,519
|
|
|
6,597
|
|
||
Accrued warranty
|
4,341
|
|
|
4,862
|
|
||
Customer deposits
|
4,526
|
|
|
4,537
|
|
||
Contingent inventory reserves
|
3,840
|
|
|
2,210
|
|
||
Accrued Avid litigation settlement, current
(2)
|
2,500
|
|
|
—
|
|
||
Accrued royalty payments
|
2,325
|
|
|
1,912
|
|
||
Others
|
16,911
|
|
|
15,655
|
|
||
Total
|
$
|
52,828
|
|
|
$
|
55,150
|
|
|
Video
|
|
Cable Edge
|
|
Total
|
||||||
Balance as of December 31, 2016
|
$
|
176,519
|
|
|
$
|
60,760
|
|
|
$
|
237,279
|
|
Foreign currency translation adjustment
|
4,603
|
|
|
50
|
|
|
4,653
|
|
|||
Balance as of September 29, 2017
|
$
|
181,122
|
|
|
$
|
60,810
|
|
|
$
|
241,932
|
|
|
|
|
September 29, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
Weighted Average Remaining Life (Years)
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Carrying
Amount
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Carrying
Amount
|
||||||||||||
Developed core technology
|
2.4
|
|
$
|
31,707
|
|
|
$
|
(19,101
|
)
|
|
$
|
12,606
|
|
|
$
|
31,707
|
|
|
$
|
(15,216
|
)
|
|
$
|
16,491
|
|
Customer relationships/contracts
|
3.4
|
|
44,748
|
|
|
(34,425
|
)
|
|
10,323
|
|
|
44,384
|
|
|
(32,098
|
)
|
|
12,286
|
|
||||||
Trademarks and trade names
|
2.4
|
|
641
|
|
|
(254
|
)
|
|
387
|
|
|
573
|
|
|
(119
|
)
|
|
454
|
|
||||||
Maintenance agreements and related relationships
|
N/A
|
|
5,500
|
|
|
(5,500
|
)
|
|
—
|
|
|
5,500
|
|
|
(5,500
|
)
|
|
—
|
|
||||||
Order Backlog
|
N/A
|
|
3,011
|
|
|
(3,011
|
)
|
|
—
|
|
|
3,011
|
|
|
(3,011
|
)
|
|
—
|
|
||||||
Total identifiable intangibles
|
|
|
$
|
85,607
|
|
|
$
|
(62,291
|
)
|
|
$
|
23,316
|
|
|
$
|
85,175
|
|
|
$
|
(55,944
|
)
|
|
$
|
29,231
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 29,
2017 |
|
September 30,
2016 |
|
September 29,
2017 |
|
September 30,
2016 |
||||||||
Included in cost of revenue
|
$
|
1,295
|
|
|
$
|
1,380
|
|
|
$
|
3,885
|
|
|
$
|
3,105
|
|
Included in operating expenses
|
793
|
|
|
3,009
|
|
|
2,347
|
|
|
9,606
|
|
||||
Total amortization expense
|
$
|
2,088
|
|
|
$
|
4,389
|
|
|
$
|
6,232
|
|
|
$
|
12,711
|
|
|
Cost of Revenue
|
|
Operating
Expenses
|
|
Total
|
||||||
Year ended December 31,
|
|
|
|
|
|
||||||
2017 (remaining three months)
|
$
|
1,296
|
|
|
$
|
794
|
|
|
$
|
2,090
|
|
2018
|
5,180
|
|
|
3,182
|
|
|
8,362
|
|
|||
2019
|
5,180
|
|
|
3,182
|
|
|
8,362
|
|
|||
2020
|
950
|
|
|
3,048
|
|
|
3,998
|
|
|||
2021
|
—
|
|
|
504
|
|
|
504
|
|
|||
Total future amortization expense
|
$
|
12,606
|
|
|
$
|
10,710
|
|
|
$
|
23,316
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 29,
2017 |
|
September 30,
2016 |
|
September 29,
2017 |
|
September 30,
2016 |
||||||||
Restructuring and related charges in:
|
|
|
|
|
|
|
|
||||||||
Product cost of revenue
|
$
|
549
|
|
|
$
|
(1
|
)
|
|
$
|
1,335
|
|
|
$
|
(24
|
)
|
Operating expenses-Restructuring and related charges
|
2,028
|
|
|
(27
|
)
|
|
4,084
|
|
|
4,488
|
|
||||
Total restructuring and related charges
|
$
|
2,577
|
|
|
$
|
(28
|
)
|
|
$
|
5,419
|
|
|
$
|
4,464
|
|
Years ending December 31,
|
|
||
2017 (remaining three months)
|
$
|
1,145
|
|
2018
|
2,937
|
|
|
2019
|
1,379
|
|
|
2020
|
543
|
|
|
Total
|
$
|
6,004
|
|
|
Excess facilities
|
|
VDP
(1)
|
|
Severance and benefits
(2)
|
|
Total
|
||||||||
Balance at December 31, 2016
|
$
|
2,375
|
|
|
$
|
9,650
|
|
|
$
|
1,519
|
|
|
$
|
13,544
|
|
Charges for 2016 Harmonic Restructuring Plan
|
73
|
|
|
1,781
|
|
|
1,137
|
|
|
2,991
|
|
||||
Adjustments to restructuring provisions
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
(7
|
)
|
||||
Cash payments
|
(921
|
)
|
|
(6,232
|
)
|
|
(2,512
|
)
|
|
(9,665
|
)
|
||||
Foreign exchange gain
|
—
|
|
|
805
|
|
|
36
|
|
|
841
|
|
||||
Balance at September 29, 2017
|
1,527
|
|
|
6,004
|
|
|
173
|
|
|
7,704
|
|
||||
Less: current portion
(3)
|
(730
|
)
|
|
(3,519
|
)
|
|
(173
|
)
|
|
(4,422
|
)
|
||||
Long-term portion
(3)
|
$
|
797
|
|
|
$
|
2,485
|
|
|
$
|
—
|
|
|
$
|
3,282
|
|
|
Excess facilities
|
|
Non-VDP Severance and benefits
|
|
Total
|
||||||
Charges for 2017 Restructuring Plan
|
318
|
|
|
2,117
|
|
|
2,435
|
|
|||
Cash payments
|
(45
|
)
|
|
(1,593
|
)
|
|
(1,638
|
)
|
|||
Non-cash write-offs
|
58
|
|
|
—
|
|
|
58
|
|
|||
Balance at September 29, 2017
|
331
|
|
|
524
|
|
|
855
|
|
|||
Less: current portion
(1)
|
(160
|
)
|
|
(524
|
)
|
|
(684
|
)
|
|||
Long-term portion
(2)
|
$
|
171
|
|
|
$
|
—
|
|
|
$
|
171
|
|
|
September 29, 2017
|
|
December 31, 2016
|
||||
Liability:
|
|
|
|
||||
Principal amount
|
$
|
128,250
|
|
|
$
|
128,250
|
|
Less: Debt discount, net of amortization
|
(18,680
|
)
|
|
(22,302
|
)
|
||
Less: Debt issuance costs, net of amortization
|
(2,252
|
)
|
|
(2,689
|
)
|
||
Carrying amount
|
$
|
107,318
|
|
|
$
|
103,259
|
|
Remaining amortization period (years)
|
3.2
|
|
|
3.9
|
|
||
Effective interest rate on liability component
|
9.94
|
%
|
|
9.94
|
%
|
||
|
|
|
|
||||
Equity:
|
|
|
|
||||
Value of conversion option
|
$
|
26,925
|
|
|
$
|
26,925
|
|
Less: Equity issuance costs
|
(863
|
)
|
|
(863
|
)
|
||
Carrying amount
|
$
|
26,062
|
|
|
$
|
26,062
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 29, 2017
|
|
September 30, 2016
|
|
September 29, 2017
|
|
September 30, 2016
|
||||||||
Contractual interest expense
|
$
|
1,283
|
|
|
$
|
1,283
|
|
|
$
|
3,848
|
|
|
$
|
3,848
|
|
Amortization of debt discount
|
1,235
|
|
|
1,117
|
|
|
3,623
|
|
|
3,274
|
|
||||
Amortization of debt issuance costs
|
149
|
|
|
135
|
|
|
437
|
|
|
395
|
|
||||
Total interest expense recognized
|
$
|
2,667
|
|
|
$
|
2,535
|
|
|
$
|
7,908
|
|
|
$
|
7,517
|
|
|
September 29, 2017
|
|
December 31, 2016
|
||||
Financing from French government agencies related to various government incentive programs
(1)
|
$
|
20,205
|
|
|
$
|
17,930
|
|
Term loans
(2)
|
1,334
|
|
|
1,400
|
|
||
Obligations under capital leases
|
1,334
|
|
|
1,860
|
|
||
Total debt obligations
|
22,873
|
|
|
21,190
|
|
||
Less: current portion
|
(7,434
|
)
|
|
(7,275
|
)
|
||
Long-term portion
|
$
|
15,439
|
|
|
$
|
13,915
|
|
Years ending December 31,
|
Capital lease obligations
|
|
Other Debt obligations
|
||||
2017 (remaining three months)
|
$
|
305
|
|
|
$
|
616
|
|
2018
|
864
|
|
|
6,058
|
|
||
2019
|
93
|
|
|
6,995
|
|
||
2020
|
50
|
|
|
6,800
|
|
||
2021
|
22
|
|
|
505
|
|
||
Thereafter
|
—
|
|
|
565
|
|
||
Total
|
$
|
1,334
|
|
|
$
|
21,539
|
|
|
|
|
Stock Options Outstanding
|
|
RSUs Outstanding**
|
|||||||||||
|
Shares
Available for
Grant
|
|
Number
of
Shares
|
|
Weighted
Average
Exercise Price
|
|
Number
of
Units
|
|
Weighted
Average
Grant
Date Fair
Value
|
|||||||
Balance at December 31, 2016
|
3,912
|
|
|
5,019
|
|
|
$
|
6.01
|
|
|
3,864
|
|
|
$
|
4.26
|
|
Authorized
|
7,400
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Granted*
|
(4,446
|
)
|
|
30
|
|
|
5.10
|
|
|
2,943
|
|
|
5.40
|
|
||
Options exercised
|
—
|
|
|
(97
|
)
|
|
3.03
|
|
|
—
|
|
|
—
|
|
||
Shares released
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,244
|
)
|
|
4.12
|
|
||
Forfeited*
|
2,490
|
|
|
(717
|
)
|
|
5.95
|
|
|
(1,182
|
)
|
|
5.05
|
|
||
Balance at September 29, 2017
|
9,356
|
|
|
4,235
|
|
|
$
|
6.09
|
|
|
3,381
|
|
|
$
|
5.04
|
|
|
Number
of
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term (Years)
|
|
Aggregate
Intrinsic
Value
|
|||||
Vested and expected to vest
|
4,176
|
|
|
$
|
6.10
|
|
|
3.1
|
|
$
|
84
|
|
Exercisable
|
3,505
|
|
|
6.31
|
|
|
2.7
|
|
84
|
|
|
Number of
Shares
Underlying
Restricted
Stock
Units
|
|
Weighted
Average
Remaining
Vesting
Period
(Years)
|
|
Aggregate
Fair
Value
|
|||
Vested and expected to vest
|
2,759
|
|
|
0.8
|
|
$
|
8,415
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 29, 2017
|
|
September 30, 2016
|
|
September 29,
2017 |
|
September 30,
2016 |
||||||||
Service cost
|
$
|
55
|
|
|
$
|
70
|
|
|
$
|
165
|
|
|
$
|
164
|
|
Interest cost
|
16
|
|
|
29
|
|
|
48
|
|
|
68
|
|
||||
Recognized net actuarial loss
|
1
|
|
|
—
|
|
|
4
|
|
|
—
|
|
||||
Net periodic benefit cost included in operating loss
|
$
|
72
|
|
|
$
|
99
|
|
|
$
|
217
|
|
|
$
|
232
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 29,
2017 |
|
September 30,
2016 |
|
September 29,
2017 |
|
September 30,
2016 |
||||||||
Stock-based compensation in:
|
|
|
|
|
|
|
|
||||||||
Cost of revenue
|
$
|
478
|
|
|
$
|
360
|
|
|
$
|
1,623
|
|
|
$
|
1,011
|
|
Research and development expense
|
1,183
|
|
|
771
|
|
|
3,496
|
|
|
2,581
|
|
||||
Selling, general and administrative expense
|
2,059
|
|
|
1,549
|
|
|
5,988
|
|
|
4,950
|
|
||||
Total stock-based compensation in operating expense
|
3,242
|
|
|
2,320
|
|
|
9,484
|
|
|
7,531
|
|
||||
Total stock-based compensation
|
$
|
3,720
|
|
|
$
|
2,680
|
|
|
$
|
11,107
|
|
|
$
|
8,542
|
|
|
Employee Stock Options
|
|||||||
|
Three months ended
|
|
Nine months ended
|
|||||
|
September 30,
2016 |
|
September 29,
2017 |
|
September 30,
2016 |
|||
Expected term (years)
|
4.30
|
|
|
4.60
|
|
|
4.30
|
|
Volatility
|
39
|
%
|
|
43
|
%
|
|
36
|
%
|
Risk-free interest rate
|
1.0
|
%
|
|
1.7
|
%
|
|
1.4
|
%
|
Expected dividends
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
ESPP Purchase Period Ending
|
||||||||||
|
December 31,
2017 |
|
June 30,
2017 |
|
December 31,
2016 |
|
July 1,
2016 |
||||
Expected term (years)
|
0.50
|
|
|
0.49
|
|
|
0.50
|
|
|
0.5
|
|
Volatility
|
43
|
%
|
|
41
|
%
|
|
70
|
%
|
|
54
|
%
|
Risk-free interest rate
|
1.2
|
%
|
|
1.0
|
%
|
|
0.6
|
%
|
|
0.4
|
%
|
Expected dividends
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
Estimated weighted average fair value per share at purchase date
|
$1.42
|
|
$1.40
|
|
$1.04
|
|
$1.19
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 29,
2017 |
|
September 30,
2016 |
|
September 29,
2017 |
|
September 30,
2016 |
||||||||
Loss before income taxes
|
$
|
(17,498
|
)
|
|
$
|
(16,254
|
)
|
|
$
|
(72,678
|
)
|
|
$
|
(61,353
|
)
|
(Benefit from) provision for income taxes
|
(1,915
|
)
|
|
(242
|
)
|
|
(1,568
|
)
|
|
518
|
|
||||
Effective income tax rate
|
10.9
|
%
|
|
1.5
|
%
|
|
2.2
|
%
|
|
(0.8
|
)%
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 29,
2017 |
|
September 30,
2016 |
|
September 29,
2017 |
|
September 30,
2016 |
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(15,583
|
)
|
|
$
|
(16,012
|
)
|
|
$
|
(71,110
|
)
|
|
$
|
(61,871
|
)
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common shares outstanding
|
|
|
|
|
|
|
|
||||||||
Basic and diluted
|
81,445
|
|
|
78,092
|
|
|
80,618
|
|
|
77,475
|
|
||||
Net loss per share:
|
|
|
|
|
|
|
|
||||||||
Basic and diluted
|
$
|
(0.19
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
(0.88
|
)
|
|
$
|
(0.80
|
)
|
|
Three months ended
|
|
Nine months ended
|
||||||||
|
September 29,
2017 |
|
September 30,
2016 |
|
September 29,
2017 |
|
September 30,
2016 |
||||
Stock options
|
4,377
|
|
|
5,193
|
|
|
4,628
|
|
|
5,389
|
|
RSUs
|
3,213
|
|
|
2,800
|
|
|
3,107
|
|
|
2,273
|
|
Stock purchase rights under the ESPP
|
1,118
|
|
|
1,212
|
|
|
630
|
|
|
641
|
|
Warrants
(1)
|
782
|
|
|
43
|
|
|
782
|
|
|
14
|
|
Total
|
9,490
|
|
|
9,248
|
|
|
9,147
|
|
|
8,317
|
|
|
Foreign Currency Translation Adjustments
|
|
Unrealized Gains (Losses) on Available-for-Sale Investments
|
|
Actuarial Loss
|
|
Total
|
||||||||
Balance as of December 31, 2016
|
$
|
(7,267
|
)
|
|
$
|
276
|
|
|
$
|
(279
|
)
|
|
$
|
(7,270
|
)
|
Other comprehensive income (loss) before reclassifications
|
7,147
|
|
|
(605
|
)
|
|
—
|
|
|
6,542
|
|
||||
Provision for income taxes
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
||||
Balance as of September 29, 2017
|
$
|
(120
|
)
|
|
$
|
(331
|
)
|
|
$
|
(279
|
)
|
|
$
|
(730
|
)
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 29, 2017
|
|
September 30, 2016
|
|
September 29, 2017
|
|
September 30, 2016
|
||||||||
Gains (losses) on cash flow hedges from foreign currency contracts:
|
|
|
|
|
|
|
|
||||||||
Cost of revenue
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
(7
|
)
|
Operating expenses
|
—
|
|
|
41
|
|
|
—
|
|
|
(46
|
)
|
||||
Total reclassifications from AOCI
|
$
|
—
|
|
|
$
|
47
|
|
|
$
|
—
|
|
|
$
|
(53
|
)
|
|
|||||||||||||||
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 29, 2017
|
|
September 30, 2016
|
|
September 29, 2017
|
|
September 30, 2016
|
||||||||
Net revenue:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Video
|
$
|
84,155
|
|
|
$
|
91,353
|
|
|
$
|
231,876
|
|
|
$
|
246,949
|
|
Cable Edge
|
7,859
|
|
|
10,053
|
|
|
25,396
|
|
|
45,860
|
|
||||
Total consolidated net revenue
|
$
|
92,014
|
|
|
$
|
101,406
|
|
|
$
|
257,272
|
|
|
$
|
292,809
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
||||
Video
|
$
|
7,009
|
|
|
$
|
4,886
|
|
|
$
|
(7,774
|
)
|
|
$
|
(1,943
|
)
|
Cable Edge
|
(5,357
|
)
|
|
(4,767
|
)
|
|
(18,848
|
)
|
|
(7,118
|
)
|
||||
Total segment operating (loss) income
|
1,652
|
|
|
119
|
|
|
(26,622
|
)
|
|
(9,061
|
)
|
||||
Unallocated corporate expenses
|
(10,050
|
)
|
|
(4,983
|
)
|
|
(18,825
|
)
|
|
(20,493
|
)
|
||||
Stock-based compensation
|
(3,720
|
)
|
|
(2,680
|
)
|
|
(11,107
|
)
|
|
(8,542
|
)
|
||||
Amortization of intangibles
|
(2,088
|
)
|
|
(4,389
|
)
|
|
(6,232
|
)
|
|
(12,711
|
)
|
||||
Loss from operations
|
(14,206
|
)
|
|
(11,933
|
)
|
|
(62,786
|
)
|
|
(50,807
|
)
|
||||
Non-operating expense, net
|
(3,292
|
)
|
|
(4,321
|
)
|
|
(9,892
|
)
|
|
(10,546
|
)
|
||||
Loss before income taxes
|
$
|
(17,498
|
)
|
|
$
|
(16,254
|
)
|
|
$
|
(72,678
|
)
|
|
$
|
(61,353
|
)
|
Years ending December 31,
|
|
||
2017 (remaining three months)
|
$
|
3,359
|
|
2018
|
13,053
|
|
|
2019
|
11,607
|
|
|
2020
|
8,218
|
|
|
2021
|
2,738
|
|
|
Thereafter
|
11,169
|
|
|
Total
|
$
|
50,144
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 29,
2017 |
|
September 30,
2016 |
|
September 29,
2017 |
|
September 30,
2016 |
||||||||
Balance at beginning of period
|
$
|
4,142
|
|
|
$
|
5,095
|
|
|
$
|
4,862
|
|
|
$
|
3,913
|
|
Balance assumed from TVN acquisition
|
—
|
|
|
—
|
|
|
—
|
|
|
1,012
|
|
||||
Accrual for current period warranties
|
1,354
|
|
|
1,552
|
|
|
3,849
|
|
|
4,527
|
|
||||
Changes in liability related to pre-existing warranties
|
—
|
|
|
(99
|
)
|
|
—
|
|
|
(173
|
)
|
||||
Warranty costs incurred
|
(1,155
|
)
|
|
(1,469
|
)
|
|
(4,370
|
)
|
|
(4,200
|
)
|
||||
Balance at end of period
|
$
|
4,341
|
|
|
$
|
5,079
|
|
|
$
|
4,341
|
|
|
$
|
5,079
|
|
•
|
developing trends and demands in the markets we address, particularly emerging markets;
|
•
|
economic conditions, particularly in certain geographies, and in financial markets;
|
•
|
new and future products and services;
|
•
|
capital spending of our customers;
|
•
|
our strategic direction, future business plans and growth strategy;
|
•
|
industry and customer consolidation;
|
•
|
expected demand for and benefits of our products and services;
|
•
|
seasonality of revenue and concentration of revenue sources;
|
•
|
expectations regarding the impact of our TVN acquisition;
|
•
|
expectations regarding our CableOS solutions;
|
•
|
expectations regarding the impact of the Warrant issued to Comcast on our business;
|
•
|
potential future acquisitions and dispositions;
|
•
|
anticipated results of potential or actual litigation;
|
•
|
our competitive environment;
|
•
|
the impact of our restructuring plans;
|
•
|
the impact of governmental regulation;
|
•
|
anticipated revenue and expenses, including the sources of such revenue and expenses;
|
•
|
expected impacts of changes in accounting rules;
|
•
|
expectations regarding the usability of our inventory and the risk that inventory will exceed forecasted demand;
|
•
|
expectations and estimates related to goodwill and intangible assets and their associated carrying value;
|
•
|
use of cash, cash needs and ability to raise capital; and
|
•
|
the condition of our cash investments.
|
|
Three months ended
|
|
|
|
|
Nine months ended
|
|
|
|
||||||||||||||||||
|
September 29, 2017
|
|
September 30, 2016
|
|
Q3 FY17 vs Q3 FY16
|
|
September 29, 2017
|
|
September 30, 2016
|
|
Q3 FY17 YTD vs Q3 FY16 YTD
|
||||||||||||||||
Segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Video
|
$
|
84,155
|
|
|
$
|
91,353
|
|
|
$
|
(7,198
|
)
|
(8
|
)%
|
|
$
|
231,876
|
|
|
$
|
246,949
|
|
|
$
|
(15,073
|
)
|
(6
|
)%
|
Cable Edge
|
7,859
|
|
|
10,053
|
|
|
(2,194
|
)
|
(22
|
)%
|
|
25,396
|
|
|
45,860
|
|
|
(20,464
|
)
|
(45
|
)%
|
||||||
Total net revenue
|
$
|
92,014
|
|
|
$
|
101,406
|
|
|
$
|
(9,392
|
)
|
(9
|
)%
|
|
$
|
257,272
|
|
|
$
|
292,809
|
|
|
$
|
(35,537
|
)
|
(12
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Segment revenue as a % of total net revenue:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Video
|
91
|
%
|
|
90
|
%
|
|
|
|
|
90
|
%
|
|
84
|
%
|
|
|
|
||||||||||
Cable Edge
|
9
|
%
|
|
10
|
%
|
|
|
|
|
10
|
%
|
|
16
|
%
|
|
|
|
|
Three months ended
|
|
|
|
|
Nine months ended
|
|
|
|
||||||||||||||||||
|
September 29, 2017
|
|
September 30, 2016
|
|
Q3 FY17 vs Q3 FY16
|
|
September 29, 2017
|
|
September 30, 2016
|
|
Q3 FY17 YTD vs Q3 FY16 YTD
|
||||||||||||||||
Geography:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Americas
|
$
|
48,656
|
|
|
$
|
47,856
|
|
|
$
|
800
|
|
2
|
%
|
|
$
|
127,173
|
|
|
$
|
154,513
|
|
|
$
|
(27,340
|
)
|
(18
|
)%
|
EMEA
|
27,528
|
|
|
32,405
|
|
|
(4,877
|
)
|
(15
|
)%
|
|
77,920
|
|
|
85,716
|
|
|
(7,796
|
)
|
(9
|
)%
|
||||||
APAC
|
15,830
|
|
|
21,145
|
|
|
(5,315
|
)
|
(25
|
)%
|
|
52,179
|
|
|
52,580
|
|
|
(401
|
)
|
(1
|
)%
|
||||||
Total net revenue
|
$
|
92,014
|
|
|
$
|
101,406
|
|
|
$
|
(9,392
|
)
|
(9
|
)%
|
|
$
|
257,272
|
|
|
$
|
292,809
|
|
|
$
|
(35,537
|
)
|
(12
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Regional revenue as a % of total net revenue:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Americas
|
53
|
%
|
|
47
|
%
|
|
|
|
|
49
|
%
|
|
53
|
%
|
|
|
|
||||||||||
EMEA
|
30
|
%
|
|
32
|
%
|
|
|
|
|
30
|
%
|
|
29
|
%
|
|
|
|
||||||||||
APAC
|
17
|
%
|
|
21
|
%
|
|
|
|
|
21
|
%
|
|
18
|
%
|
|
|
|
|
Three months ended
|
|
|
|
|
Nine months ended
|
|
|
|
||||||||||||||||||
|
September 29, 2017
|
|
September 30, 2016
|
|
Q3 FY17 vs Q3 FY16
|
|
September 29, 2017
|
|
September 30, 2016
|
|
Q3 FY17 YTD vs Q3 FY16 YTD
|
||||||||||||||||
Gross profit
|
$
|
47,025
|
|
|
$
|
51,363
|
|
|
$
|
(4,338
|
)
|
(8
|
)%
|
|
$
|
121,248
|
|
|
$
|
143,057
|
|
|
$
|
(21,809
|
)
|
(15
|
)%
|
As a percentage of net revenue (“gross margin”)
|
51.1
|
%
|
|
50.7
|
%
|
|
0.4
|
%
|
|
|
47.1
|
%
|
|
48.9
|
%
|
|
(1.8
|
)%
|
|
|
Three months ended
|
|
|
|
|
Nine months ended
|
|
|
|
||||||||||||||||||
|
September 29, 2017
|
|
September 30, 2016
|
|
Q3 FY17 vs Q3 FY16
|
|
September 29, 2017
|
|
September 30, 2016
|
|
Q3 FY17 YTD vs Q3 FY16 YTD
|
||||||||||||||||
Research and development
|
$
|
21,289
|
|
|
$
|
24,202
|
|
|
$
|
(2,913
|
)
|
(12
|
)%
|
|
$
|
73,226
|
|
|
$
|
74,272
|
|
|
$
|
(1,046
|
)
|
(1
|
)%
|
As a percentage of net revenue
|
23.1
|
%
|
|
23.9
|
%
|
|
|
|
|
28.5
|
%
|
|
25.4
|
%
|
|
|
|
|
Three months ended
|
|
|
|
|
Nine months ended
|
|
|
|
||||||||||||||||||
|
September 29, 2017
|
|
September 30, 2016
|
|
Q3 FY17 vs Q3 FY16
|
|
September 29, 2017
|
|
September 30, 2016
|
|
Q3 FY17 YTD vs Q3 FY16 YTD
|
||||||||||||||||
Selling, general and administrative
|
$
|
37,121
|
|
|
$
|
36,112
|
|
|
$
|
1,009
|
|
3
|
%
|
|
$
|
104,377
|
|
|
$
|
105,498
|
|
|
$
|
(1,121
|
)
|
(1
|
)%
|
As a percentage of net revenue
|
40.3
|
%
|
|
35.6
|
%
|
|
|
|
|
40.6
|
%
|
|
36.0
|
%
|
|
|
|
|
Three months ended
|
|
|
|
|
Nine months ended
|
|
|
|
||||||||||||||||||
|
September 29, 2017
|
|
September 30, 2016
|
|
Q3 FY17 vs Q3 FY16
|
|
September 29, 2017
|
|
September 30, 2016
|
|
Q3 FY17 YTD vs Q3 FY16 YTD
|
||||||||||||||||
Video
|
$
|
7,009
|
|
|
$
|
4,886
|
|
|
$
|
2,123
|
|
43
|
%
|
|
$
|
(7,774
|
)
|
|
$
|
(1,943
|
)
|
|
$
|
(5,831
|
)
|
300
|
%
|
Cable Edge
|
(5,357
|
)
|
|
(4,767
|
)
|
|
(590
|
)
|
12
|
%
|
|
(18,848
|
)
|
|
(7,118
|
)
|
|
(11,730
|
)
|
165
|
%
|
||||||
Total segment operating income (loss)
|
$
|
1,652
|
|
|
$
|
119
|
|
|
$
|
1,533
|
|
1,288
|
%
|
|
$
|
(26,622
|
)
|
|
$
|
(9,061
|
)
|
|
$
|
(17,561
|
)
|
194
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Segment operating income (loss) as a % of segment revenue (“operating margin”):
|
|||||||||||||||||||||||||||
Video
|
8.3
|
%
|
|
5.3
|
%
|
|
3.0
|
%
|
|
|
(3.4
|
)%
|
|
(0.8
|
)%
|
|
(2.6
|
)%
|
|
||||||||
Cable Edge
|
(68.2
|
)%
|
|
(47.4
|
)%
|
|
(20.8
|
)%
|
|
|
(74.2
|
)%
|
|
(15.5
|
)%
|
|
(58.7
|
)%
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 29, 2017
|
|
September 30, 2016
|
|
September 29, 2017
|
|
September 30, 2016
|
||||||||
Total segment operating income (income)
|
$
|
1,652
|
|
|
$
|
119
|
|
|
$
|
(26,622
|
)
|
|
$
|
(9,061
|
)
|
Unallocated corporate expenses
|
(10,050
|
)
|
|
(4,983
|
)
|
|
(18,825
|
)
|
|
(20,493
|
)
|
||||
Stock-based compensation
|
(3,720
|
)
|
|
(2,680
|
)
|
|
(11,107
|
)
|
|
(8,542
|
)
|
||||
Amortization of intangibles
|
(2,088
|
)
|
|
(4,389
|
)
|
|
(6,232
|
)
|
|
(12,711
|
)
|
||||
Loss from operations
|
(14,206
|
)
|
|
(11,933
|
)
|
|
(62,786
|
)
|
|
(50,807
|
)
|
||||
Non-operating expense, net
|
(3,292
|
)
|
|
(4,321
|
)
|
|
(9,892
|
)
|
|
(10,546
|
)
|
||||
Loss before income taxes
|
$
|
(17,498
|
)
|
|
$
|
(16,254
|
)
|
|
$
|
(72,678
|
)
|
|
$
|
(61,353
|
)
|
|
Three months ended
|
|
|
|
|
Nine months ended
|
|
|
|
||||||||||||||||||
|
September 29, 2017
|
|
September 30, 2016
|
|
Q3 FY17 vs Q3 FY16
|
|
September 29, 2017
|
|
September 30, 2016
|
|
Q3 FY17 YTD vs Q3 FY16 YTD
|
||||||||||||||||
Amortization of intangibles
|
$
|
793
|
|
|
$
|
3,009
|
|
|
$
|
(2,216
|
)
|
(74
|
)%
|
|
$
|
2,347
|
|
|
$
|
9,606
|
|
|
$
|
(7,259
|
)
|
(76
|
)%
|
As a percentage of net revenue
|
0.9
|
%
|
|
3.0
|
%
|
|
|
|
|
0.9
|
%
|
|
3.3
|
%
|
|
|
|
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 29,
2017 |
|
September 30,
2016 |
|
September 29,
2017 |
|
September 30,
2016 |
||||||||
Restructuring and related charges in:
|
|
|
|
|
|
|
|
||||||||
Product cost of revenue
|
$
|
549
|
|
|
$
|
(1
|
)
|
|
$
|
1,335
|
|
|
$
|
(24
|
)
|
Operating expenses-Restructuring and related charges
|
2,028
|
|
|
(27
|
)
|
|
4,084
|
|
|
4,488
|
|
||||
Total restructuring and related charges
|
$
|
2,577
|
|
|
$
|
(28
|
)
|
|
$
|
5,419
|
|
|
$
|
4,464
|
|
Years ending December 31,
|
|
||
2017 (remaining three months)
|
$
|
1,145
|
|
2018
|
2,937
|
|
|
2019
|
1,379
|
|
|
2020
|
543
|
|
|
Total
|
$
|
6,004
|
|
|
Three months ended
|
|
|
|
|
Nine months ended
|
|
|
|
||||||||||||||||||
|
September 29, 2017
|
|
September 30, 2016
|
|
Q3 FY17 vs Q3 FY16
|
|
September 29, 2017
|
|
September 30, 2016
|
|
Q3 FY17 YTD vs Q3 FY16 YTD
|
||||||||||||||||
(Benefit from) provision for income taxes
|
$
|
(1,915
|
)
|
|
$
|
(242
|
)
|
|
$
|
(1,673
|
)
|
691
|
%
|
|
$
|
(1,568
|
)
|
|
$
|
518
|
|
|
$
|
(2,086
|
)
|
(403
|
)%
|
Effective income tax rate
|
10.9
|
%
|
|
1.5
|
%
|
|
|
|
|
2.2
|
%
|
|
(0.8
|
)%
|
|
|
|
|
Nine months ended
|
||||||
|
September 29, 2017
|
|
September 30, 2016
|
||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
(5,970
|
)
|
|
$
|
(12,638
|
)
|
Investing activities
|
(2,177
|
)
|
|
(68,400
|
)
|
||
Financing activities
|
1,276
|
|
|
(229
|
)
|
||
Effect of foreign exchange rate changes on cash
|
1,275
|
|
|
(182
|
)
|
||
Net decrease in cash and cash equivalents
|
$
|
(5,596
|
)
|
|
$
|
(81,449
|
)
|
|
Payments due by period
|
||||||||||||||||||
|
Total
Amounts
Committed
|
|
Less than 1 year
|
|
1 to 3 years
|
|
4 to 5 years
|
|
More than 5 years
|
||||||||||
Convertible debt
|
$
|
128,250
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
128,250
|
|
|
$
|
—
|
|
Interest on convertible debt
|
17,955
|
|
|
5,130
|
|
|
10,260
|
|
|
2,565
|
|
|
—
|
|
|||||
Other debts
|
21,539
|
|
|
6,474
|
|
|
13,870
|
|
|
1,025
|
|
|
170
|
|
|||||
Capital Lease
|
1,334
|
|
|
960
|
|
|
351
|
|
|
23
|
|
|
—
|
|
|||||
Operating leases
|
50,144
|
|
|
13,666
|
|
|
21,328
|
|
|
7,281
|
|
|
7,869
|
|
|||||
Purchase commitments
|
27,764
|
|
|
21,325
|
|
|
4,202
|
|
|
1,239
|
|
|
998
|
|
|||||
Avid litigation settlement fees
|
6,000
|
|
|
2,500
|
|
|
3,500
|
|
|
—
|
|
|
—
|
|
|||||
Total contractual obligations
|
$
|
252,986
|
|
|
$
|
50,055
|
|
|
$
|
53,511
|
|
|
$
|
140,383
|
|
|
$
|
9,037
|
|
Other commercial commitments:
|
|
|
|
|
|
|
|
|
|
||||||||||
Standby letters of credit
|
$
|
845
|
|
|
$
|
305
|
|
|
$
|
540
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total commercial commitments
|
$
|
845
|
|
|
$
|
305
|
|
|
$
|
540
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
September 29, 2017
|
|
December 31, 2016
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
||||
Purchase
|
$
|
12,925
|
|
|
$
|
4,056
|
|
Sell
|
$
|
1,501
|
|
|
$
|
11,157
|
|
HARMONIC INC.
|
|
|
|
By:
|
/s/ Sanjay Kalra
|
|
Sanjay Kalra
|
|
Chief Financial Officer
|
|
Date: November 6, 2017
|
COMPANY:
|
HARMONIC INC.
|
|
|
|
By:
|
|
|
|
Title:
|
|
|
|
Date:
|
|
|
EMPLOYEE:
|
Patrick Harshman
|
|
|
|
|
|
(signature)
|
|
Date:
|
|
|
COMPANY:
|
HARMONIC INC.
|
|
|
|
By:
|
|
|
|
Title:
|
|
|
|
Date:
|
|
|
|
Employee:
|
|
(print name)
|
|
|
|
(signature)
|
|
Date:
|
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Harmonic Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant, and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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By:
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/s/ Patrick J. Harshman
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Patrick J. Harshman
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President and Chief Executive Officer
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Harmonic Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant, and have:
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a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
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By:
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/s/ Sanjay Kalra
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Sanjay Kalra
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Chief Financial Officer
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/s/ Patrick J. Harshman
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Patrick J. Harshman
|
President and Chief Executive Officer
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/s/ Sanjay Kalra
|
Sanjay Kalra
|
Chief Financial Officer
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