Harmonic Announces Second Quarter 2016 Results

SAN JOSE, CA--(Marketwired - August 09, 2016) - Harmonic Inc. (NASDAQ: HLIT), the worldwide leader in video delivery infrastructure, announced today its preliminary and unaudited results for the second quarter of 2016.

GAAP net revenue for the second quarter of 2016 was $108.8 million, compared with $81.8 million for the first quarter of 2016 and $103.1 million for the second quarter of 2015.

Non-GAAP net revenue for the second quarter of 2016 was $109.5 million, compared with $82.5 million for the first quarter of 2016 and $103.1 million for the second quarter of 2015.

Bookings for the second quarter of 2016 were $117.3 million, compared with $109.6 million for the first quarter of 2016 and $99.3 million for the second quarter of 2015.

GAAP net loss for the second quarter of 2016 was $(20.6) million, or $(0.27) per diluted share, compared with a GAAP net loss for the first quarter of 2016 of $(25.2) million, or $(0.33) per diluted share, and a GAAP net loss of $(1.0) million, or $(0.01) per diluted share, for the second quarter of 2015.

Non-GAAP net loss for the second quarter of 2016 was $(0.2) million, or $0.00 per diluted share, compared with non-GAAP net loss for the first quarter of 2016 of $(8.2) million, or $(0.11) per diluted share, and non-GAAP net income of $4.2 million, or $0.05 per diluted share, for the second quarter of 2015. See "Use of Non-GAAP Financial Measures" and "GAAP to Non-GAAP Reconciliations" below.

Total cash, cash equivalents and short-term investments were $65.3 million at the end of the second quarter of 2016, down $11.0 million from $76.2 million at the end of the prior quarter, primarily due to the payment of certain purchase price adjustments related to the Thomson Video Networks ("TVN") acquisition and an increase in accounts receivable which reflects our sequential revenue growth and payments of restructuring and integration charges. In the second quarter of 2016, the Company used approximately $2.9 million of cash from operations.

"Our financial results for the second quarter of 2016 were at the high end of our plan for both our Video and Cable Edge segments," said Patrick Harshman, Harmonic's President and CEO. "Consequently, we enter the second half of the year with record backlog and deferred revenue. Our new CableOS products are scheduled to begin shipping in the fourth quarter of this year, and we remain on track to realize targeted synergy savings from the combination of Harmonic and TVN," concluded Mr. Harshman.

Second Quarter 2016 Highlights

• Strong sequential and year-over-year bookings and revenue growth.
• Backlog and deferred revenue grew to a record $190.4 million.
• Remained on track to realize $20-$22 million of annualized cost savings from the combination of Harmonic and TVN by the end of calendar year 2016.
• Entered into a $10 million engineering collaboration agreement that will extend into 2017.
• Several key trials underway on our recently announced VOS Cloud and VOS 360 software-as-a-service offerings with new cloud partners and tier 1 pay TV operators.

Business Outlook

Third Quarter 2016 GAAP Financial Guidance

For the third quarter of 2016, Harmonic anticipates:

• Net revenue to be $104.5 million to $109.5 million, which includes Video revenue of $92.5 million to $95.5 million and Cable Edge revenue of $12.0 million to $14.0 million
• Gross margin to be 50.0% to 51.0%
• Operating expense to be $65.5 million to $66.5 million
• Operating loss to be $(12.5) million to $(10.5) million
• EPS to be $(0.16) to $(0.14)
• Share count for EPS calculation to be approximately 78 million shares of Harmonic common stock
• Cash on hand at quarter-end to be $60.0 million to $65.0 million

2016 GAAP Financial Guidance

Harmonic's projections for full year 2016 include two fiscal quarters of financial projections for TVN, from the third quarter through the fourth quarter of 2016.

For 2016, Harmonic anticipates:

• Net revenue to be $408.0 million to $418.0 million, which includes Video revenue of $348.0 million to $353.0 million and Cable Edge revenue of $60.0 million to $65.0 million
• Gross margin to be 50.0% to 51.0%
• Operating expense to be $257.5 million to $261.5 million
• Operating loss to be $(55.0) million to $(50.0) million
• EPS to be $(0.69) to $(0.64)
• Share count for EPS calculation to be 78 million to 79 million shares of Harmonic common stock
• Capital expenditures to be $14.0 million to $16.0 million
• Cash on hand at year-end to be $65.0 million to $70.0 million

Third Quarter 2016 Non-GAAP Financial Guidance

For the third quarter of 2016, Harmonic anticipates:

• Net revenue to be $105.0 million to $110.0 million, which includes Video revenue of $93.0 million to $96.0 million and Cable Edge revenue of $12.0 million to $14.0 million
• Gross margin to be 53.0% to 54.0%
• Operating expense to be $54.0 million to $55.0 million
• Operating income to be $2.0 million to $4.0 million
• EPS to be $0.01 to $0.03
• Tax rate to be approximately 15%
• Share count for EPS calculation to be approximately 78 million shares of Harmonic common stock
• Cash on hand at quarter-end to be $60.0 million to $65.0 million

See "Use of Non-GAAP Financial Measures" and "GAAP to Non-GAAP Reconciliations" below.

2016 Non-GAAP Financial Guidance

For 2016, Harmonic anticipates:

• Net revenue to be $410.0 million to $420.0 million, which includes Video revenue of $350.0 million to $355.0 million and Cable Edge revenue of $60.0 million to $65.0 million
• Gross margin to be 53.0% to 54.0%
• Operating expense to be $212.0 million to $216.0 million
• EPS to be $0.01 to $0.06
• Tax rate to be approximately 15%
• Share count for EPS calculation to be 78 million to 79 million shares of Harmonic common stock
• Capital expenditures to be $14.0 million to $16.0 million
• Cash on hand at year-end to be $65.0 million to $70.0 million

See "Use of Non-GAAP Financial Measures" and "GAAP to Non-GAAP Reconciliations" below.

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, August 9, 2016. A listen-only broadcast of the conference call can be accessed either from the Company's website at www.harmonicinc.com or by calling +1.847.585.4405 or +1.888.771.4371 (passcode 42982000). The replay will be available after 4:30 p.m. Pacific at the same website address or by calling +1.630.652.3042 or +1.888.843.7419 (passcode 42982000#).

About Harmonic Inc.

Harmonic (NASDAQ: HLIT) is the worldwide leader in video delivery infrastructure for emerging television and video services. Harmonic enables customers to produce, deliver, and monetize amazing video experiences, with unequalled business agility and operational efficiency, by providing market-leading innovation, high-quality service, and compelling total-cost-of-ownership. 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 second quarter ended July 1, 2016 and our expectations concerning quarter-on-quarter growth; GAAP net revenue, GAAP gross margins, GAAP operating expenses, GAAP operating income (loss), GAAP EPS, non-GAAP revenue, non-GAAP gross margins, non-GAAP operating expenses, non-GAAP operating income (loss), non-GAAP EPS, and tax rate and capital expenditures for the third quarter of 2016 and fiscal year ended December 31, 2016, as well as cash on hand at the end of the third quarter of 2016 and at December 31, 2016. 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, in no particular order, the following: unexpected delays, difficulties and/or costs relating to integrating TVN with Harmonic; anticipated business opportunities and operational efficiencies for the combined company do not fully materialize; the trends toward more high-definition, on-demand and anytime, anywhere video will not continue to develop at its current pace or will expire; a strong U.S. dollar may have a negative impact on our business in certain international markets; 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 on our sales and operations; our ability to develop new and enhanced products in a timely manner and market acceptance of our new or existing products; losses of one or more key customers; risks associated with our international operations, including in Ukraine; risks associated with our CCAP and VOS™ product initiatives; dependence on market acceptance of various types of 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 fluctuations 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 our markets; risks associated with unpredictable sales cycles; our dependence on contract manufacturers and sole or limited source suppliers; the effect on our business of natural disasters; and risks associated with our outstanding convertible notes. 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 most recent Annual Report on Form 10-K for the year ended December 31, 2015, our recent Quarterly Reports on Form 10-Q 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.

Use of Non-GAAP Financial Measures

In establishing operating budgets, managing its business performance, and setting internal measurement targets, we exclude 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: revenue, gross profit, operating expenses, income (loss) from operations and net income (loss) (including those amounts as a percentage of revenue), and net income (loss) per diluted 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 provided with this press release. The types of non-GAAP adjustments described below have historically been excluded from our GAAP financial measures: acquisition accounting impacts to TVN deferred revenue and TVN inventory valuation; TVN acquisition-and integration-related costs; Cable Edge inventory charge in connection with certain product lines; restructuring and related charges; and non-cash items, such as impairment of long-term investment, stock-based compensation expense, amortization of intangibles and non-cash interest expenses related to convertible debt 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.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands, except per share data)
			July 1, 2016				December 31, 2015
ASSETS
Current assets:
	Cash and cash equivalents		$	51,516			$	126,190
	Short-term investments			13,760				26,604
	Accounts receivable, net			102,668				69,515
	Inventories			36,624				38,819
	Prepaid expenses and other current assets			44,210				25,003
Total current assets				248,778				286,131
Property and equipment, net				36,517				27,012
Goodwill				235,369				197,781
Intangibles, net				39,638				4,097
Other long-term assets				28,635				9,936
Total assets			$	588,937			$	524,957
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Other debts and capital lease obligations, current		$	7,829			$	-
	Accounts payable			35,794				19,364
	Income taxes payable			139				307
	Deferred revenue			63,518				33,856
	Accrued liabilities			52,346				31,354
Total current liabilities				159,626				84,881
Convertible debt, long-term				100,712				98,295
Other debts and capital lease obligations, long-term				16,190				-
Income taxes payable, long-term				3,980				3,886
Deferred tax liabilities, long-term				957				-
Other non-current liabilities				15,341				9,727
Total liabilities				296,806				196,789
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; 78,015 and 76,015 shares issued and outstanding at July 1, 2016 and December 31, 2015, respectively			78				76
	Additional paid-in capital			2,245,120				2,236,418
	Accumulated deficit			(1,949,715	)			(1,903,908	)
	Accumulated other comprehensive loss			(3,352	)			(4,418	)
Total stockholders' equity				292,131				328,168
Total liabilities and stockholders' equity			$	588,937			$	524,957

Harmonic Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share amounts)
				Three months ended								Six months ended
				July 1, 2016				July 3, 2015				July 1, 2016(1)				July 3, 2015
Net revenue				$	108,759			$	103,103			$	190,591			$	207,119
Cost of revenue					57,667				48,718				98,845				97,706
	Gross profit				51,092				54,385				91,746				109,413
Operating expenses:
	Research and development				26,507				21,816				50,070				44,145
	Selling, general and administrative				36,516				31,281				69,386				62,477
	Amortization of intangibles				4,232				1,446				6,597				2,892
	Restructuring and asset impairment charges				1,903				185				4,515				229
		Total operating expenses			69,158				54,728				130,568				109,743
Loss from operations					(18,066	)			(343	)			(38,822	)			(330	)
Interest (expense) income, net					(2,651	)			17				(5,072	)			72
Other income (expense), net					332				59				323				(447	)
Loss on impairment of long-term investment					-				-				(1,476	)			(2,505	)
Loss before income taxes					(20,385	)			(267	)			(45,047	)			(3,210	)
Provision for income taxes					242				727				760				441
Net loss				$	(20,627	)		$	(994	)		$	(45,807	)		$	(3,651	)
Net loss per share:
	Basic and diluted			$	(0.27	)		$	(0.01	)		$	(0.59	)		$	(0.04	)
Shares used in per share calculation:
	Basic and diluted				77,342				88,426				77,168				88,541

(1) On February 29, 2016, Harmonic closed the acquisition of TVN and as a result, our 2016 results for the six months ended July 1, 2016 include TVN results beginning on February 29, 2016.

Harmonic Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
				Six months ended
				July 1, 2016				July 3, 2015
Cash flows from operating activities:
Net loss				$	(45,807	)		$	(3,651	)
	Adjustments to reconcile net loss to net cash provided by operating activities:
	Amortization of intangibles				8,322				3,439
	Depreciation				7,737				6,930
	Stock-based compensation				5,862				8,018
	Amortization of discount on convertible debt				2,417				-
	Restructuring, asset impairment and loss on retirement of fixed assets				1,687				252
	Loss on impairment of long-term investment				1,476				2,505
	Deferred income taxes				38				-
	Provision for excess and obsolete inventories				5,203				843
	Allowance for doubtful accounts, returns and discounts				697				(713	)
	Excess tax benefits from stock-based compensation				-				(22	)
	Other non-cash adjustments, net				144				-
	Changes in assets and liabilities, net of effects of acquisition:
		Accounts receivable			(16,000	)			(1,222	)
		Inventories			3,158				(595	)
		Prepaid expenses and other assets			(5,039	)			(11,635	)
		Accounts payable			2,168				6,415
		Deferred revenue			26,795				9,833
		Income taxes payable			(122	)			(815	)
		Accrued and other liabilities			(7,029	)			(5,994	)
Net cash (used in) provided by operating activities					(8,293	)			13,588
Cash flows from investing activities:
	Acquisition of business, net of cash acquired				(72,989	)			-
	Purchases of investments				-				(12,986	)
	Proceeds from sales and maturities of investments				12,842				15,744
	Purchases of property and equipment				(7,708	)			(7,505	)
	Purchases of long-term investments				-				(85	)
Net cash used in investing activities					(67,855	)			(4,832	)
Cash flows from financing activities:
	Payment of convertible debt issuance costs				(582	)			-
	Increase in other debts and capital leases				5,972				-
	Repayment of other debts and capital leases				(6,524	)			-
	Payments for repurchase of common stock				-				(12,171	)
	Proceeds from common stock issued to employees				3,737				9,133
	Payment of tax withholding obligations related to net share settlements of restricted stock units				(1,034	)			(2,642	)
	Excess tax benefits from stock-based compensation				-				22
Net cash provided by (used in) financing activities					1,569				(5,658	)
Effect of exchange rate changes on cash and cash equivalents					(95	)			(81	)
Net (decrease) increase in cash and cash equivalents					(74,674	)			3,017
Cash and cash equivalents at beginning of period					126,190				73,032
Cash and cash equivalents at end of period				$	51,516			$	76,049

Harmonic Inc.
Revenue Information
(Unaudited, in thousands, except percentages)

		Three months ended												Three months ended												Three months ended
		July 1, 2016												April 1, 2016												July 3, 2015
		GAAP			Adjustment (1)			Non-GAAP						GAAP(2)			Adjustment (1)			Non-GAAP(2)						GAAP and Non-GAAP(3)
Product
Video Products		$	62,158		$	205		$	62,363		57	%		$	44,212		$	355		$	44,567		54	%		$	56,096		54	%
Cable Edge			15,751			-			15,751		14	%			13,432			-			13,432		16	%			21,351		21	%
Services and Support			30,850			575			31,425		29	%			24,188			268			24,456		30	%			25,656		25	%
Total		$	108,759		$	780		$	109,539		100	%		$	81,832		$	623		$	82,455		100	%		$	103,103		100	%
Geography
Americas		$	57,681		$	150		$	57,831		53	%		$	48,977		$	81		$	49,058		59	%		$	60,342		58	%
EMEA			33,456			488			33,944		31	%			19,855			401			20,256		25	%			27,360		27	%
APAC			17,622			142			17,764		16	%			13,000			141			13,141		16	%			15,401		15	%
Total		$	108,759		$	780		$	109,539		100	%		$	81,832		$	623		$	82,455		100	%		$	103,103		100	%
Market
Service Provider		$	64,921		$	329		$	65,250		60	%		$	51,270		$	150		$	51,420		62	%		$	64,041		62	%
Broadcast and Media			43,838			451			44,289		40	%			30,562			473			31,035		38	%			39,062		38	%
Total		$	108,759		$	780		$	109,539		100	%		$	81,832		$	623		$	82,455		100	%		$	103,103		100	%

(1) Non-GAAP revenue for the three months ended July 1, 2016 and April 1, 2016 include $0.8 million and $0.6 million adjustments relating to TVN deferred revenue as a result of acquisition accounting, respectively.

(2) Excludes TVN revenue prior to March 1, 2016.

(3) There is no revenue adjustment for the three months ended July 3, 2015.

Harmonic Inc.
GAAP to Non-GAAP Reconciliations (Unaudited)
(In thousands, except percentages and per share data)
			Three months ended
			July 1, 2016
			Revenue			Gross Profit				Total Operating Expense				Income (loss) from Operations				Net loss
GAAP			$	108,759		$	51,092			$	69,158			$	(18,066	)		$	(20,627	)
Cable Edge inventory charge				-			4,519				-				4,519				4,519
Acquisition accounting impact related to TVN deferred revenue				780			780				-				780				780
	Stock-based compensation in cost of revenue			-			424				-				424				424
	Stock-based compensation in research and development			-			-				(841	)			841				841
	Stock-based compensation in selling, general and administrative			-			-				(1,503	)			1,503				1,503
	Amortization of intangibles			-			1,307				(4,232	)			5,539				5,539
	Restructuring and related charges			-			6				(1,903	)			1,909				1,909
	TVN acquisition-and integration-related costs			-			433				(2,970	)			3,403				3,403
	Non-cash interest expenses related to convertible notes			-			-				-				-				1,233
	Discrete tax items and tax effect of non-GAAP adjustments			-			-				-				-				278
Non-GAAP			$	109,539		$	58,561			$	57,709			$	852			$	(198	)
As a % of revenue (GAAP)							47.0	%			63.6	%			(16.6	)%			(19.0	)%
As a % of revenue (Non-GAAP)							53.5	%			52.7	%			0.8	%			(0.2	)%
Diluted net loss per share:
	Diluted net loss per share-GAAP																	$	(0.27	)
	Diluted net loss per share-Non-GAAP																	$	0.00
Shares used to compute diluted net loss per share:
	GAAP																		77,342
	Non-GAAP																		77,342
			Three months ended
			April 1, 2016
				Revenue			Gross Profit				Total Operating Expense				Loss from Operations				Net Loss
GAAP			$	81,832		$	40,654			$	61,410			$	(20,756	)		$	(25,180	)
Acquisition accounting impacts related to TVN deferred revenue				623			623				-				623				623
Acquisition accounting impacts related to TVN fair value of inventory				-			189				-				189				189
	Stock-based compensation in cost of revenue			-			227				-				227				227
	Stock-based compensation in research and development			-			-				(969	)			969				969
	Stock-based compensation in selling, general and administrative			-			-				(1,898	)			1,898				1,898
	Amortization of intangibles			-			418				(2,365	)			2,783				2,783
	Restructuring and related charges			-			(29	)			(2,612	)			2,583				2,583
	TVN acquisition-and integration-related costs			-			58				(3,038	)			3,096				3,096
	Impairment of long-term investment			-			-				-				-				1,476
	Non-cash interest expenses related to convertible notes			-			-				-				-				1,187
	Discrete tax items and tax effect of non-GAAP adjustments			-			-				-				-				1,963
Non-GAAP			$	82,455		$	42,140			$	50,528			$	(8,388	)		$	(8,186	)
As a % of revenue (GAAP)							49.7	%			75.0	%			(25.4	)%			(30.8	)%
As a % of revenue (Non-GAAP)							51.1	%			61.3	%			(10.2	)%			(9.9	)%
Diluted net loss per share:
	Diluted net loss per share-GAAP																	$	(0.33	)
	Diluted net loss per share-Non-GAAP																	$	(0.11	)
Shares used to compute diluted net loss per share:
	GAAP																		76,996
	Non-GAAP																		76,996
			Three months ended
			July 3, 2015
				Revenue			Gross Profit				Total Operating Expense				Income (Loss) from Operations				Net Income (Loss)
GAAP			$	103,103		$	54,385			$	54,728			$	(343	)		$	(994	)
Stock-based compensation in cost of revenue				-			422				-				422				422
	Stock-based compensation in research and development			-			-				(1,027	)			1,027				1,027
	Stock-based compensation in selling, general and administrative			-			-				(2,435	)			2,435				2,435
	Amortization of intangibles			-			86				(1,446	)			1,532				1,532
	Restructuring and related charges			-			-				(185	)			185				185
	Discrete tax items and tax effect of non-GAAP adjustments			-			-				-				-				(393	)
Non-GAAP			$	103,103		$	54,893			$	49,635			$	5,258			$	4,214
As a % of revenue (GAAP)							52.7	%			53.1	%			(0.3	)%			(1.0	)%
As a % of revenue (Non-GAAP)							53.2	%			48.1	%			5.1	%			4.1	%
Diluted net income (loss) per share:
	Diluted net loss per share-GAAP																	$	(0.01	)
	Diluted net income per share-Non-GAAP																	$	0.05
Shares used to compute diluted net income (loss) per share:
	GAAP																		88,426
	Non-GAAP																		89,444

Harmonic Inc.
GAAP to Non-GAAP Reconciliations on Business Outlook
(In millions, except percentages and per share data)

			Q3 2016 Financial Guidance
			Revenue		Gross Profit		Total Operating Expense		Income (loss) from Operations		Net Income (loss)
GAAP			$104.5 to $109.5		$53.0 to $56.0		$65.5 to $66.5		$(12.5) to $(10.5)		($12.5) to ($10.5)
	Acquisition accounting impact related to TVN deferred revenue		Approx. $0.5		Approx. $0.5		-		Approx. $0.5		Approx. $0.5
	Stock-based compensation expense		-		Approx. $0.5		Approx. ($3.0)		Approx. $3.5		Approx. $3.5
	Amortization of intangibles		-		Approx. $1.5		Approx. ($3.5)		Approx. $5.0		Approx. $5.0
	Restructuring and related charges and TVN acquisition/integration costs		-		Approx. $0.5		Approx. ($5.0)		Approx. $5.5		Approx. $5.5
	Non-cash interest expense related to convertible notes		-		-		-		-		Approx. $1.0
	Discrete tax items and tax effect of non-GAAP adjustments		-		-		-		-		Approx. ($2.5)
			Approx. $0.5		Approx. $3.0		Approx. ($11.5)		Approx. $14.5		Approx. $13.0
Non-GAAP			$105.0 to $110.0		$56.0 to $59.0		$54.0 to $55.0		$2.0 to $4.0		$0.5 to $2.5
As a % of revenue (GAAP)					50% to 51%		61% to 63%		(12)% to (9)%		(12)% to (10)%
As a % of revenue (Non-GAAP)					53% to 54%		50% to 52%		2% to 4%		0% to 2%
Diluted income (loss) per share:
	Diluted net loss per share-GAAP										$(0.16) to $(0.14)
	Diluted net income per share-Non-GAAP										$0.01 to $0.03
Shares used to compute diluted income (loss) per share:
	GAAP and Non-GAAP										78.0

			2016 Financial Guidance
			Revenue		Gross Profit		Total Operating Expense		Income (loss) from Operations		Net Income (loss)
GAAP			$408.0 to $418.0		$202.5 to $211.5		$257.5 to $261.5		$(55.0) to $(50.0)		$(54.0) to $(50.0)
	Acquisition accounting impact related to TVN deferred revenue		Approx. $2.0		Approx. $2.0		-		Approx. $2.0		Approx. $2.0
	Acquisition accounting impact related to TVN fair value of inventory		-		Approx. $0.2		-		Approx. $0.2		Approx. $0.2
	Stock-based compensation expense		-		Approx. $2.0		Approx. ($12.0)		Approx. $14.0		Approx. $14.0
	Amortization of intangibles		-		Approx. $4.3		Approx. ($11.0)		Approx. $15.3		Approx. $15.3
	Restructuring and related charges and TVN acquisition/integration costs		-		Approx. $1.5		Approx. ($22.5)		Approx. $24.0		Approx. $24.0
	Cable Edge inventory charge		-		Approx. $4.5		-		Approx. $4.5		Approx. $4.5
	Non-cash interest expense related to convertible notes		-		-		-		-		Approx. $4.5
	Discrete tax items and tax effect of non-GAAP adjustments		-		-		-		-		Approx. ($10.0)
			Approx. $2.0		Approx. $14.5		Approx. ($45.5)		Approx. $60.0		Approx. $54.5
Non-GAAP			$410.0 to $420.0		$217.0 to $226.0		$212.0 to $216.0		$5.0 to $10.0		$0.5 to $4.5
As a % of revenue (GAAP)					50% to 51%		62% to 63%		(13)% to (12)%		(13)% to (12)%
As a % of revenue (Non-GAAP)					53% to 54%		51% to 52%		1% to 2%		0% to 1%
Diluted income (loss) per share:
	Diluted net loss per share-GAAP										$(0.69) to $(0.64)
	Diluted net income per share-Non-GAAP										$0.01 to $0.06
Shares used to compute diluted income (loss) per share:
	GAAP and Non-GAAP										78 to 79

CONTACTS:
Harold Covert
Chief Financial Officer
Harmonic Inc.
+1.408.542.2500

Blair King
Director, Investor Relations
Harmonic Inc.
+1.408.490.6172