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 | ¨ | Smaller reporting company | ¨ |
Emerging growth company | ¨ |
September 28, 2018 | December 31, 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 61,654 | $ | 57,024 | |||
Accounts receivable, net | 77,986 | 69,844 | |||||
Inventories | 23,333 | 25,976 | |||||
Prepaid expenses and other current assets | 24,226 | 18,931 | |||||
Total current assets | 187,199 | 171,775 | |||||
Property and equipment, net | 24,151 | 29,265 | |||||
Goodwill | 241,512 | 242,827 | |||||
Intangibles, net | 14,938 | 21,279 | |||||
Other long-term assets | 38,624 | 42,913 | |||||
Total assets | $ | 506,424 | $ | 508,059 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Other debts and capital lease obligations, current | $ | 7,677 | $ | 7,610 | |||
Accounts payable | 29,354 | 33,112 | |||||
Income taxes payable | 830 | 233 | |||||
Deferred revenue | 48,679 | 52,429 | |||||
Accrued and other current liabilities | 50,734 | 48,705 | |||||
Total current liabilities | 137,274 | 142,089 | |||||
Convertible notes, long-term | 113,230 | 108,748 | |||||
Other debts and capital lease obligations, long-term | 13,155 | 15,336 | |||||
Income taxes payable, long-term | 747 | 917 | |||||
Other non-current liabilities | 18,989 | 22,626 | |||||
Total liabilities | 283,395 | 289,716 | |||||
Commitments and contingencies (Note 15) | |||||||
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; 86,687 and 82,554 shares issued and outstanding at September 28, 2018 and December 31, 2017, respectively | 87 | 83 | |||||
Additional paid-in capital | 2,293,174 | 2,272,690 | |||||
Accumulated deficit | (2,070,746 | ) | (2,057,812 | ) | |||
Accumulated other comprehensive income | 514 | 3,382 | |||||
Total stockholders’ equity | 223,029 | 218,343 | |||||
Total liabilities and stockholders’ equity | $ | 506,424 | $ | 508,059 |
Three months ended | Nine months ended | ||||||||||||||
September 28, 2018 | September 29, 2017 | September 28, 2018 | September 29, 2017 | ||||||||||||
Revenue: | |||||||||||||||
Product | $ | 62,803 | $ | 58,161 | $ | 178,776 | $ | 158,657 | |||||||
Service | 37,813 | 33,853 | 111,127 | 98,615 | |||||||||||
Total net revenue | 100,616 | 92,014 | 289,903 | 257,272 | |||||||||||
Cost of revenue: | |||||||||||||||
Product | 33,224 | 27,736 | 91,084 | 85,843 | |||||||||||
Service | 17,290 | 17,253 | 49,931 | 50,181 | |||||||||||
Total cost of revenue | 50,514 | 44,989 | 141,015 | 136,024 | |||||||||||
Total gross profit | 50,102 | 47,025 | 148,888 | 121,248 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 22,251 | 21,289 | 67,250 | 73,226 | |||||||||||
Selling, general and administrative | 29,723 | 37,121 | 88,874 | 104,377 | |||||||||||
Amortization of intangibles | 792 | 793 | 2,396 | 2,347 | |||||||||||
Restructuring and related charges | 987 | 2,028 | 2,704 | 4,084 | |||||||||||
Total operating expenses | 53,753 | 61,231 | 161,224 | 184,034 | |||||||||||
Loss from operations | (3,651 | ) | (14,206 | ) | (12,336 | ) | (62,786 | ) | |||||||
Interest expense, net | (2,872 | ) | (2,794 | ) | (8,492 | ) | (8,064 | ) | |||||||
Other expense, net | (365 | ) | (498 | ) | (698 | ) | (1,828 | ) | |||||||
Loss before income taxes | (6,888 | ) | (17,498 | ) | (21,526 | ) | (72,678 | ) | |||||||
Provision for (benefit from) income taxes | 870 | (1,915 | ) | 2,839 | (1,568 | ) | |||||||||
Net loss | $ | (7,758 | ) | $ | (15,583 | ) | $ | (24,365 | ) | $ | (71,110 | ) | |||
Net loss per share: | |||||||||||||||
Basic and diluted | $ | (0.09 | ) | $ | (0.19 | ) | $ | (0.29 | ) | $ | (0.88 | ) | |||
Shares used in per share calculation: | |||||||||||||||
Basic and diluted | 86,321 | 81,445 | 85,188 | 80,618 |
Three months ended | Nine months ended | ||||||||||||||
September 28, 2018 | September 29, 2017 | September 28, 2018 | September 29, 2017 | ||||||||||||
Net loss | $ | (7,758 | ) | $ | (15,583 | ) | $ | (24,365 | ) | $ | (71,110 | ) | |||
Change in unrealized gain (loss) on available-for-sale securities: | |||||||||||||||
Unrealized gain (loss) arising during the period | — | 8 | — | (605 | ) | ||||||||||
Change in foreign currency translation adjustments | 447 | 2,265 | (2,577 | ) | 7,147 | ||||||||||
Other comprehensive income (loss) before tax | 447 | 2,273 | (2,577 | ) | 6,542 | ||||||||||
Less: Provision for (benefit from) income taxes | (78 | ) | — | 291 | 2 | ||||||||||
Other comprehensive income (loss), net of tax | 525 | 2,273 | (2,868 | ) | 6,540 | ||||||||||
Total comprehensive loss | $ | (7,233 | ) | $ | (13,310 | ) | $ | (27,233 | ) | $ | (64,570 | ) |
Nine months ended | |||||||
September 28, 2018 | September 29, 2017 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (24,365 | ) | $ | (71,110 | ) | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||
Amortization of intangibles | 6,281 | 6,232 | |||||
Depreciation | 9,910 | 11,045 | |||||
Stock-based compensation | 14,202 | 11,107 | |||||
Amortization of discount on convertible debt and issuance cost | 4,482 | 4,060 | |||||
Restructuring, asset impairment and loss on retirement of fixed assets | 1,105 | 565 | |||||
Amortization of non-cash warrant | 1,185 | 38 | |||||
Deferred income taxes, net | 1,056 | — | |||||
Foreign currency adjustments | (1,034 | ) | 1,795 | ||||
Provision for excess and obsolete inventories | 1,259 | 5,578 | |||||
Allowance for doubtful accounts and returns | 1,357 | 4,309 | |||||
Other non-cash adjustments, net | 286 | 298 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (9,585 | ) | 11,367 | ||||
Inventories | 997 | 6,188 | |||||
Prepaid expenses and other assets | 2,507 | 6,702 | |||||
Accounts payable | (4,032 | ) | 2,129 | ||||
Deferred revenue | 1,783 | (1,098 | ) | ||||
Income taxes payable | 461 | (2,122 | ) | ||||
Accrued and other liabilities | (2,188 | ) | (3,053 | ) | |||
Net cash provided by (used in) operating activities | 5,667 | (5,970 | ) | ||||
Cash flows from investing activities: | |||||||
Proceeds from maturities of investments | — | 3,106 | |||||
Proceeds from sales of investments | 104 | 3,792 | |||||
Purchases of property and equipment | (4,703 | ) | (9,075 | ) | |||
Net cash used in investing activities | (4,599 | ) | (2,177 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from other debts and capital leases | 5,066 | 6,344 | |||||
Repayment of other debts and capital leases | (6,568 | ) | (7,008 | ) | |||
Proceeds from common stock issued to employees | 4,299 | 4,697 | |||||
Payment of tax withholding obligations related to net share settlements of restricted stock units | (166 | ) | (2,757 | ) | |||
Net cash provided by financing activities | 2,631 | 1,276 | |||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (580 | ) | 1,471 | ||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 3,119 | (5,400 | ) | ||||
Cash, cash equivalents and restricted cash at beginning of period | 58,757 | 57,420 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 61,876 | $ | 52,020 | |||
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets | |||||||
Cash and cash equivalents | $ | 61,654 | $ | 50,039 | |||
Restricted cash included in prepaid expenses and other current assets | 222 | 803 | |||||
Restricted cash included in other long-term assets | — | 1,178 | |||||
Total cash, cash equivalents and restricted cash | $ | 61,876 | $ | 52,020 |
CONDENSED CONSOLIDATED BALANCE SHEETS | Balance as of December 31, 2017 | Cumulative Impact from Adopting Topic 606 | Balance as of January 1, 2018 | ||||||||
ASSETS | |||||||||||
Accounts receivable, net | $ | 69,844 | $ | 1,781 | $ | 71,625 | |||||
Prepaid expenses and other current assets | 18,931 | 3,578 | 22,509 | ||||||||
Other long-term assets | 42,913 | 773 | 43,686 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Deferred revenue | $ | 52,429 | $ | (4,826 | ) | $ | 47,603 | ||||
Other non-current liabilities | 22,626 | (473 | ) | 22,153 | |||||||
Accumulated deficit | (2,057,812 | ) | 11,431 | (2,046,381 | ) |
Three months ended September 28, 2018 | Nine months ended September 28, 2018 | ||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | As Reported | Previous Accounting Guidance | Impact from Adopting Topic 606 | As Reported | Previous Accounting Guidance | Impact from Adopting Topic 606 | |||||||||||||||||
Total net revenue | $ | 100,616 | $ | 100,382 | $ | 234 | $ | 289,903 | $ | 288,419 | $ | 1,484 | |||||||||||
Total cost of revenue | 50,514 | 50,888 | (374 | ) | 141,015 | 141,029 | (14 | ) | |||||||||||||||
Total gross profit | 50,102 | 49,494 | 608 | 148,888 | 147,390 | 1,498 | |||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Selling, general and administrative | 29,723 | 29,680 | 43 | 88,874 | 89,221 | (347 | ) | ||||||||||||||||
Loss from operations | (3,651 | ) | (4,216 | ) | 565 | (12,336 | ) | (14,181 | ) | 1,845 | |||||||||||||
Loss before income taxes | (6,888 | ) | (7,453 | ) | 565 | (21,526 | ) | (23,371 | ) | 1,845 | |||||||||||||
Net loss | (7,758 | ) | (8,323 | ) | 565 | (24,365 | ) | (26,210 | ) | 1,845 |
As of September 28, 2018 | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | As Reported | Previous Accounting Guidance | Impact from Adopting Topic 606 | ||||||
ASSETS | |||||||||
Accounts receivable, net | 77,986 | 74,949 | $ | 3,037 | |||||
Prepaid expenses and other current assets | 24,226 | 19,681 | 4,545 | ||||||
Other long-term assets | 38,624 | 38,082 | 542 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
Deferred revenue | 48,679 | 53,370 | (4,691 | ) | |||||
Other non-current liabilities | 18,989 | 19,450 | (461 | ) | |||||
Accumulated deficit | (2,070,746 | ) | (2,084,022 | ) | 13,276 |
Three months ended | Nine months ended | |||||||||||||||
Financial Statement Location | September 28, 2018 | September 29, 2017 | September 28, 2018 | September 29, 2017 | ||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||
Gains (losses) recognized in income | Other expense, net | $ | (30 | ) | $ | 119 | $ | (1,412 | ) | $ | (66 | ) |
September 28, 2018 | December 31, 2017 | |||||||
Derivatives not designated as hedging instruments: | ||||||||
Purchase | $ | 28,782 | $ | 12,875 | ||||
Sell | $ | — | $ | 1,509 |
Asset Derivatives | Derivative Liabilities | |||||||||||||||||||
Balance Sheet Location | September 28, 2018 | December 31, 2017 | Balance Sheet Location | September 28, 2018 | December 31, 2017 | |||||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||||||
Foreign currency contracts | Prepaid expenses and other current assets | $ | 5 | $ | 33 | Accrued and other current liabilities | $ | 195 | $ | 4 | ||||||||||
Total derivatives | $ | 5 | $ | 33 | $ | 195 | $ | 4 |
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 | |||||||||
Derivative assets | $ | 5 | — | $ | 5 | ||||||
Derivative liabilities | $ | 195 | — | $ | 195 |
• | 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 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 28, 2018 | |||||||||||||||
Cash equivalents | |||||||||||||||
Money market funds | $ | — | $ | — | $ | — | $ | — | |||||||
Prepaid expenses and other current assets | |||||||||||||||
Derivative assets | — | 5 | — | 5 | |||||||||||
Total assets measured and recorded at fair value | $ | — | $ | 5 | $ | — | $ | 5 | |||||||
Accrued and other current liabilities | |||||||||||||||
Derivative liabilities | $ | — | $ | 195 | $ | — | $ | 195 | |||||||
Total liabilities measured and recorded at fair value | $ | — | $ | 195 | $ | — | $ | 195 | |||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
As of December 31, 2017 | |||||||||||||||
Cash equivalents | |||||||||||||||
Money market funds | $ | 22 | $ | — | $ | — | $ | 22 | |||||||
Prepaid expenses and other current assets | |||||||||||||||
Derivative assets | — | 33 | — | 33 | |||||||||||
Total assets measured and recorded at fair value | $ | 22 | $ | 33 | $ | — | $ | 55 | |||||||
Accrued and other current liabilities | |||||||||||||||
Derivative liabilities | $ | — | $ | 4 | $ | — | $ | 4 | |||||||
Total liabilities measured and recorded at fair value | $ | — | $ | 4 | $ | — | $ | 4 |
September 28, 2018 | December 31, 2017 | ||||||
Accounts receivable, net: | |||||||
Accounts receivable | $ | 81,059 | $ | 74,475 | |||
Less: allowances for doubtful accounts and sales returns | (3,073 | ) | (4,631 | ) | |||
Total | $ | 77,986 | $ | 69,844 |
September 28, 2018 | December 31, 2017 | ||||||
Inventories: | |||||||
Raw materials | $ | 1,374 | $ | 2,881 | |||
Work-in-process | 847 | 933 | |||||
Finished goods | 9,966 | 10,130 | |||||
Service-related spares | 11,146 | 12,032 | |||||
Total | $ | 23,333 | $ | 25,976 |
September 28, 2018 | December 31, 2017 | ||||||
Prepaid expenses and other current assets: | |||||||
French R&D tax credits receivable(1) | $ | 7,453 | $ | 6,609 | |||
Deferred cost of revenue | 4,700 | 4,440 | |||||
Contract assets(2) | 3,656 | — | |||||
Prepaid maintenance, royalty, rent, property taxes and value added tax | 3,609 | 3,867 | |||||
Capitalized commission | 1,259 | — | |||||
Restricted cash(3) | 222 | 530 | |||||
Other | 3,327 | 3,485 | |||||
Total | $ | 24,226 | $ | 18,931 |
September 28, 2018 | December 31, 2017 | ||||||
Property and equipment, net: | |||||||
Machinery and equipment | $ | 88,167 | $ | 87,121 | |||
Capitalized software | 35,887 | 35,139 | |||||
Leasehold improvements | 14,990 | 15,051 | |||||
Furniture and fixtures | 6,506 | 6,534 | |||||
Property and equipment, gross | 145,550 | 143,845 | |||||
Less: accumulated depreciation and amortization | (121,399 | ) | (114,580 | ) | |||
Total | $ | 24,151 | $ | 29,265 |
September 28, 2018 | December 31, 2017 | ||||||
Other long-term assets: | |||||||
R&D tax credits receivable | $ | 18,104 | $ | 22,322 | |||
Deferred tax assets | 9,362 | 10,462 | |||||
Equity investment | 3,593 | 3,593 | |||||
Others(1) | 7,565 | 6,536 | |||||
Total | $ | 38,624 | $ | 42,913 |
September 28, 2018 | December 31, 2017 | ||||||
Accrued and other current liabilities: | |||||||
Accrued employee compensation and related expenses | $ | 17,405 | $ | 16,414 | |||
Accrued warranty | 4,749 | 4,381 | |||||
Customer deposits | 3,638 | 5,020 | |||||
Contingent inventory reserves | 3,291 | 3,806 | |||||
Accrued TVN VDP, current (1) | 2,100 | 3,186 | |||||
Accrued royalty payments | 2,077 | 2,195 | |||||
Accrued Avid litigation settlement, current | 1,500 | — | |||||
Others | 15,974 | 13,703 | |||||
Total | $ | 50,734 | $ | 48,705 |
Video | Cable Access | Total | |||||||||
Balance as of December 31, 2017 | $ | 182,012 | $ | 60,815 | $ | 242,827 | |||||
Foreign currency translation adjustment | (1,297 | ) | (18 | ) | (1,315 | ) | |||||
Balance as of September 28, 2018 | $ | 180,715 | $ | 60,797 | $ | 241,512 |
September 28, 2018 | December 31, 2017 | ||||||||||||||||||||||||
Weighted Average Remaining Life (Years) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||
Developed core technology | 1.4 | $ | 31,707 | $ | (24,281 | ) | $ | 7,426 | $ | 31,707 | $ | (20,396 | ) | $ | 11,311 | ||||||||||
Customer relationships/contracts | 2.4 | 44,718 | (37,431 | ) | 7,287 | 44,819 | (35,205 | ) | 9,614 | ||||||||||||||||
Trademarks and trade names | 1.4 | 635 | (410 | ) | 225 | 654 | (300 | ) | 354 | ||||||||||||||||
Maintenance agreements and related relationships | n/a | 5,500 | (5,500 | ) | — | 5,500 | (5,500 | ) | — | ||||||||||||||||
Order Backlog | n/a | 3,138 | (3,138 | ) | — | 3,177 | (3,177 | ) | — | ||||||||||||||||
Total identifiable intangibles | $ | 85,698 | $ | (70,760 | ) | $ | 14,938 | $ | 85,857 | $ | (64,578 | ) | $ | 21,279 |
Three months ended | Nine months ended | |||||||||||||
September 28, 2018 | September 29, 2017 | September 28, 2018 | September 29, 2017 | |||||||||||
Included in cost of revenue | $ | 1,295 | $ | 1,295 | $ | 3,885 | $ | 3,885 | ||||||
Included in operating expenses | 792 | 793 | 2,396 | 2,347 | ||||||||||
Total amortization expense | $ | 2,087 | $ | 2,088 | $ | 6,281 | $ | 6,232 |
Cost of Revenue | Operating Expenses | Total | |||||||||
Year ended December 31, | |||||||||||
2018 (remaining three months) | $ | 1,295 | $ | 794 | $ | 2,089 | |||||
2019 | 5,180 | 3,174 | 8,354 | ||||||||
2020 | 951 | 3,042 | 3,993 | ||||||||
2021 | — | 502 | 502 | ||||||||
Total future amortization expense | $ | 7,426 | $ | 7,512 | $ | 14,938 |
Three months ended | Nine months ended | |||||||||||||
September 28, 2018 | September 29, 2017 | September 28, 2018 | September 29, 2017 | |||||||||||
Restructuring and related charges in: | ||||||||||||||
Cost of revenue | $ | 7 | $ | 549 | $ | 884 | $ | 1,335 | ||||||
Operating expenses - Restructuring and related charges | 987 | 2,028 | 2,704 | 4,084 | ||||||||||
Total restructuring and related charges | $ | 994 | $ | 2,577 | $ | 3,588 | $ | 5,419 |
Harmonic 2016 Restructuring Plan | Harmonic 2017 Restructuring Plan | Harmonic 2018 Restructuring Plan | |||||||||||||||||||||||||
Excess facilities | TVN VDP | Excess facilities | Severance and benefits | Excess facilities | Severance and benefits | Total | |||||||||||||||||||||
Balance at December 31, 2017 | $ | 2,426 | $ | 5,128 | $ | 296 | $ | 193 | $ | — | $ | — | $ | 8,043 | |||||||||||||
Charges for current period | — | — | — | — | 932 | 2,124 | 3,056 | ||||||||||||||||||||
Adjustments to restructuring provisions | 99 | 504 | — | — | 1 | (72 | ) | 532 | |||||||||||||||||||
Reclassification of deferred rent | — | — | — | — | 332 | — | 332 | ||||||||||||||||||||
Cash payments | (755 | ) | (2,363 | ) | (109 | ) | (193 | ) | (51 | ) | (2,046 | ) | (5,517 | ) | |||||||||||||
Foreign exchange effect | — | (81 | ) | — | — | — | — | (81 | ) | ||||||||||||||||||
Balance at September 28, 2018 | $ | 1,770 | $ | 3,188 | $ | 187 | $ | — | $ | 1,214 | $ | 6 | $ | 6,365 |
September 28, 2018 | December 31, 2017 | ||||||
Liability: | |||||||
Principal amount | $ | 128,250 | $ | 128,250 | |||
Less: Debt discount, net of amortization | (13,404 | ) | (17,404 | ) | |||
Less: Debt issuance costs, net of amortization | (1,616 | ) | (2,098 | ) | |||
Carrying amount | $ | 113,230 | $ | 108,748 | |||
Remaining amortization period (years) | 2.2 | 2.9 | |||||
Effective interest rate on liability component | 9.94 | % | 9.94 | % | |||
Carrying amount of equity component | $ | 26,062 | $ | 26,062 |
Three months ended | Nine months ended | |||||||||||||
September 28, 2018 | September 29, 2017 | September 28, 2018 | September 29, 2017 | |||||||||||
Contractual interest expense | $ | 1,283 | $ | 1,283 | $ | 3,848 | $ | 3,848 | ||||||
Amortization of debt discount | 1,364 | 1,235 | 4,001 | 3,623 | ||||||||||
Amortization of debt issuance costs | 164 | 149 | 481 | 437 | ||||||||||
Total interest expense recognized | $ | 2,811 | $ | 2,667 | $ | 8,330 | $ | 7,908 |
September 28, 2018 | December 31, 2017 | ||||||
Financing from French government agencies related to various government incentive programs (1) | $ | 19,443 | $ | 20,565 | |||
Term loans | 1,018 | 1,282 | |||||
Obligations under capital leases | 371 | 1,099 | |||||
Total debt obligations | 20,832 | 22,946 | |||||
Less: current portion | (7,677 | ) | (7,610 | ) | |||
Long-term portion | $ | 13,155 | $ | 15,336 |
Years ending December 31, | Capital lease obligations | Other Debt obligations | |||||
2018 (remaining three months) | $ | 205 | $ | 659 | |||
2019 | 93 | 6,934 | |||||
2020 | 50 | 6,741 | |||||
2021 | 23 | 5,441 | |||||
2022 | — | 461 | |||||
Thereafter | — | 225 | |||||
Total | $ | 371 | $ | 20,461 |
Stock Options Outstanding | |||||||||||||
Number of Shares | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | ||||||||||
Balance at December 31, 2017 | 3,880 | $ | 6.04 | ||||||||||
Granted | — | — | |||||||||||
Exercised | (88 | ) | 2.93 | ||||||||||
Forfeited | (35 | ) | 4.76 | ||||||||||
Canceled or expired | (538 | ) | 8.75 | ||||||||||
Balance at September 28, 2018 | 3,219 | 5.69 | 2.5 | $ | 1,907.4 | ||||||||
As of September 28, 2018 | |||||||||||||
Vested and expected to vest | 3,214 | 5.69 | 2.5 | $ | 1,900.0 | ||||||||
Exercisable | 3,051 | 5.74 | 2.5 | $ | 1,666.9 |
Restricted Stock Units Outstanding | |||||||
Number of Shares | Weighted Average Grant Date Fair Value Per Share | ||||||
Balance at December 31, 2017 | 2,904 | $ | 5.09 | ||||
Granted | 3,835 | 3.94 | |||||
Vested | (2,947 | ) | 4.87 | ||||
Forfeited | (216 | ) | 4.95 | ||||
Balance at September 28, 2018 | 3,576 | 4.05 |
Three months ended | Nine months ended | ||||||||||||||
September 28, 2018 | September 29, 2017 | September 28, 2018 | September 29, 2017 | ||||||||||||
Service cost | $ | 59 | $ | 55 | $ | 185 | $ | 165 | |||||||
Interest cost | 18 | 16 | 56 | 48 | |||||||||||
Recognized net actuarial loss | — | 1 | — | 4 | |||||||||||
Net periodic benefit cost | $ | 77 | $ | 72 | $ | 241 | $ | 217 |
Three months ended | Nine months ended | |||||||||||||
September 28, 2018 | September 29, 2017 | September 28, 2018 | September 29, 2017 | |||||||||||
Stock-based compensation in: | ||||||||||||||
Cost of revenue | $ | 614 | $ | 478 | $ | 1,577 | $ | 1,623 | ||||||
Research and development expense | 1,676 | 1,183 | 4,298 | 3,496 | ||||||||||
Selling, general and administrative expense | 3,143 | 2,059 | 8,327 | 5,988 | ||||||||||
Total stock-based compensation in operating expense | 4,819 | 3,242 | 12,625 | 9,484 | ||||||||||
Total stock-based compensation | $ | 5,433 | $ | 3,720 | $ | 14,202 | $ | 11,107 |
Stock Options | |
Nine months ended | |
September 29, 2017 | |
Expected term (years) | 4.6 |
Volatility | 43% |
Risk-free interest rate | 1.7% |
Expected dividends | 0.0% |
ESPP Purchase Period Ending | |||||||||||
December 31, 2018 | July 2, 2018 | December 31, 2017 | June 30, 2017 | ||||||||
Expected term (years) | 0.5 | 0.5 | 0.5 | 0.5 | |||||||
Volatility | 51 | % | 60 | % | 43 | % | 41 | % | |||
Risk-free interest rate | 2.1 | % | 1.7 | % | 1.2 | % | 1.0 | % | |||
Expected dividends | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | |||
Estimated weighted average fair value per share at purchase date | $1.32 | $1.34 | $1.42 | $1.40 |
Three months ended | Nine months ended | ||||||||||||||
September 28, 2018 | September 29, 2017 | September 28, 2018 | September 29, 2017 | ||||||||||||
Loss before income taxes | $ | (6,888 | ) | $ | (17,498 | ) | $ | (21,526 | ) | $ | (72,678 | ) | |||
Provision for (benefit from) income taxes | 870 | (1,915 | ) | 2,839 | (1,568 | ) | |||||||||
Effective income tax rate | (12.6 | )% | 10.9 | % | (13.2 | )% | 2.2 | % |
Three months ended | Nine months ended | |||||||||||||
September 28, 2018 | September 29, 2017 | September 28, 2018 | September 29, 2017 | |||||||||||
Numerator: | ||||||||||||||
Net loss | $ | (7,758 | ) | $ | (15,583 | ) | $ | (24,365 | ) | $ | (71,110 | ) | ||
Denominator: | ||||||||||||||
Weighted average number of common shares outstanding | ||||||||||||||
Basic and diluted | 86,321 | 81,445 | 85,188 | 80,618 | ||||||||||
Net loss per share: | ||||||||||||||
Basic and diluted | $ | (0.09 | ) | $ | (0.19 | ) | $ | (0.29 | ) | $ | (0.88 | ) |
Three months ended | Nine months ended | |||||||||
September 28, 2018 | September 29, 2017 | September 28, 2018 | September 29, 2017 | |||||||
Stock options | 3,219 | 4,377 | 3,386 | 4,628 | ||||||
RSUs | 3,266 | 3,213 | 2,933 | 3,107 | ||||||
Stock purchase rights under the ESPP | 529 | 1,118 | 635 | 630 | ||||||
Warrants (1) | 1,555 | 782 | 1,039 | 782 | ||||||
Total (2) | 8,569 | 9,490 | 7,993 | 9,147 |
Three months ended | Nine months ended | |||||||||||||
September 28, 2018 (1) | September 29, 2017 | September 28, 2018 | September 29, 2017 | |||||||||||
Video | ||||||||||||||
Revenue | $ | 73,344 | $ | 84,155 | $ | 224,300 | $ | 231,876 | ||||||
Gross profit | 41,937 | 48,283 | 126,721 | 126,776 | ||||||||||
Operating income (loss) | 5,258 | 7,009 | 13,492 | (7,774 | ) | |||||||||
Cable Access | ||||||||||||||
Revenue | $ | 28,062 | $ | 7,859 | $ | 66,788 | $ | 25,396 | ||||||
Gross profit | 10,871 | 1,064 | 29,698 | 4,973 | ||||||||||
Operating income (loss) | 395 | (5,357 | ) | (578 | ) | (18,848 | ) | |||||||
Total | ||||||||||||||
Revenue | $ | 101,406 | $ | 92,014 | $ | 291,088 | $ | 257,272 | ||||||
Gross profit | 52,808 | 49,347 | 156,419 | 131,749 | ||||||||||
Operating income (loss) | 5,653 | 1,652 | 12,914 | (26,622 | ) |
Three months ended | Nine months ended | |||||||||||||
September 28, 2018 | September 29, 2017 | September 28, 2018 | September 29, 2017 | |||||||||||
Total segment operating income (loss) | $ | 5,653 | $ | 1,652 | $ | 12,914 | $ | (26,622 | ) | |||||
Amortization of warrants | (790 | ) | — | (1,185 | ) | — | ||||||||
Unallocated corporate expenses | (994 | ) | (10,050 | ) | (3,582 | ) | (18,825 | ) | ||||||
Stock-based compensation | (5,433 | ) | (3,720 | ) | (14,202 | ) | (11,107 | ) | ||||||
Amortization of intangibles | (2,087 | ) | (2,088 | ) | (6,281 | ) | (6,232 | ) | ||||||
Income (loss) from operations | (3,651 | ) | (14,206 | ) | (12,336 | ) | (62,786 | ) | ||||||
Non-operating expense, net | (3,237 | ) | (3,292 | ) | (9,190 | ) | (9,892 | ) | ||||||
Loss before income taxes | $ | (6,888 | ) | $ | (17,498 | ) | $ | (21,526 | ) | $ | (72,678 | ) |
Years ending December 31, | |||
2018 (remaining three months) | $ | 3,433 | |
2019 | 13,091 | ||
2020 | 9,921 | ||
2021 | 4,276 | ||
2022 | 2,525 | ||
Thereafter | 9,325 | ||
Total | $ | 42,571 |
Three months ended | Nine months ended | |||||||||||||
September 28, 2018 | September 29, 2017 | September 28, 2018 | September 29, 2017 | |||||||||||
Balance at beginning of period | $ | 4,647 | $ | 4,142 | $ | 4,381 | $ | 4,862 | ||||||
Accrual for current period warranties | 1,563 | 1,354 | 5,013 | 3,849 | ||||||||||
Warranty costs incurred | (1,461 | ) | (1,155 | ) | (4,645 | ) | (4,370 | ) | ||||||
Balance at end of period | $ | 4,749 | $ | 4,341 | $ | 4,749 | $ | 4,341 |
• | 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 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 regulations; |
• | 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; and |
• | use of cash, cash needs and ability to raise capital. |
Three months ended | Nine months ended | ||||||||||||||||||||||||||
September 28, 2018 | September 29, 2017 | Q3 FY18 vs Q3 FY17 | September 28, 2018 | September 29, 2017 | Q3 FY18 YTD vs Q3 FY17 YTD | ||||||||||||||||||||||
Segment: | |||||||||||||||||||||||||||
Video | $ | 73,344 | $ | 84,155 | $ | (10,811 | ) | (13 | )% | $ | 224,300 | $ | 231,876 | $ | (7,576 | ) | (3 | )% | |||||||||
Cable Access | 28,062 | 7,859 | 20,203 | 257 | % | 66,788 | 25,396 | 41,392 | 163 | % | |||||||||||||||||
Total segment revenue | 101,406 | 92,014 | 9,392 | 10 | % | 291,088 | 257,272 | 33,816 | 13 | % | |||||||||||||||||
Amortization of warrants | (790 | ) | — | (790 | ) | — | (1,185 | ) | — | (1,185 | ) | — | |||||||||||||||
Total net revenue | 100,616 | 92,014 | $ | 8,602 | 9 | % | 289,903 | 257,272 | $ | 32,631 | 13 | % | |||||||||||||||
Segment revenue as a % of total segment revenue: | |||||||||||||||||||||||||||
Video | 72 | % | 91 | % | 77 | % | 90 | % | |||||||||||||||||||
Cable Access | 28 | % | 9 | % | 23 | % | 10 | % |
Three months ended | Nine months ended | ||||||||||||||||||||||||||
September 28, 2018 | September 29, 2017 | Q3 FY18 vs Q3 FY17 | September 28, 2018 | September 29, 2017 | Q3 FY18 YTD vs Q3 FY17 YTD | ||||||||||||||||||||||
Geography: | |||||||||||||||||||||||||||
Americas | $ | 54,119 | $ | 48,656 | $ | 5,463 | 11 | % | $ | 155,893 | $ | 127,173 | $ | 28,720 | 23 | % | |||||||||||
EMEA | 26,316 | 27,528 | (1,212 | ) | (4 | )% | 81,194 | 77,920 | 3,274 | 4 | % | ||||||||||||||||
APAC | 20,181 | 15,830 | 4,351 | 27 | % | 52,816 | 52,179 | 637 | 1 | % | |||||||||||||||||
Total net revenue | $ | 100,616 | $ | 92,014 | $ | 8,602 | 9 | % | $ | 289,903 | $ | 257,272 | $ | 32,631 | 13 | % | |||||||||||
Regional revenue as a % of total net revenue: | |||||||||||||||||||||||||||
Americas | 54 | % | 53 | % | 54 | % | 49 | % | |||||||||||||||||||
EMEA | 26 | % | 30 | % | 28 | % | 30 | % | |||||||||||||||||||
APAC | 20 | % | 17 | % | 18 | % | 21 | % |
Three months ended | Nine months ended | ||||||||||||||||||||||||||
September 28, 2018 | September 29, 2017 | Q3 FY18 vs Q3 FY17 | September 28, 2018 | September 29, 2017 | Q3 FY18 YTD vs Q3 FY17 YTD | ||||||||||||||||||||||
Gross profit | $ | 50,102 | $ | 47,025 | $ | 3,077 | 7 | % | $ | 148,888 | $ | 121,248 | $ | 27,640 | 23 | % | |||||||||||
As a percentage of net revenue (“gross margin”) | 49.8 | % | 51.1 | % | (1.3 | )% | 51.4 | % | 47.1 | % | 4.3 | % |
Three months ended | Nine months ended | ||||||||||||||||||||||||||
September 28, 2018 | September 29, 2017 | Q3 FY18 vs Q3 FY17 | September 28, 2018 | September 29, 2017 | Q3 FY18 YTD vs Q3 FY17 YTD | ||||||||||||||||||||||
Research and development | $ | 22,251 | $ | 21,289 | $ | 962 | 5 | % | $ | 67,250 | $ | 73,226 | $ | (5,976 | ) | (8 | )% | ||||||||||
As a percentage of net revenue | 22.1 | % | 23.1 | % | 23.2 | % | 28.5 | % |
Three months ended | Nine months ended | ||||||||||||||||||||||||||
September 28, 2018 | September 29, 2017 | Q3 FY18 vs Q3 FY17 | September 28, 2018 | September 29, 2017 | Q3 FY18 YTD vs Q3 FY17 YTD | ||||||||||||||||||||||
Selling, general and administrative | $ | 29,723 | $ | 37,121 | $ | (7,398 | ) | (20 | )% | $ | 88,874 | $ | 104,377 | $ | (15,503 | ) | (15 | )% | |||||||||
As a percentage of net revenue | 29.5 | % | 40.3 | % | 30.7 | % | 40.6 | % |
Three months ended | Nine months ended | ||||||||||||||||||||||||||
September 28, 2018 | September 29, 2017 | Q3 FY18 vs Q3 FY17 | September 28, 2018 | September 29, 2017 | Q3 FY18 YTD vs Q3 FY17 YTD | ||||||||||||||||||||||
Video | 5,258 | $ | 7,009 | $ | (1,751 | ) | (25 | )% | $ | 13,492 | $ | (7,774 | ) | $ | 21,266 | (274 | )% | ||||||||||
Cable Access | 395 | (5,357 | ) | 5,752 | (107 | )% | (578 | ) | (18,848 | ) | 18,270 | (97 | )% | ||||||||||||||
Total segment operating income (loss) | $ | 5,653 | $ | 1,652 | $ | 4,001 | 242 | % | $ | 12,914 | $ | (26,622 | ) | $ | 39,536 | (149 | )% | ||||||||||
Segment operating income (loss) as a % of segment revenue (“operating margin”): | |||||||||||||||||||||||||||
Video | 7.2 | % | 8.3 | % | (1.1 | )% | 6.0 | % | (3.4 | )% | 9.4 | % | |||||||||||||||
Cable Access | 1.4 | % | (68.2 | )% | 69.6 | % | (0.9 | )% | (74.2 | )% | 73.3 | % |
Three months ended | Nine months ended | ||||||||||||||
September 28, 2018 | September 29, 2017 | September 28, 2018 | September 29, 2017 | ||||||||||||
Total segment operating income (loss) | $ | 5,653 | $ | 1,652 | $ | 12,914 | $ | (26,622 | ) | ||||||
Amortization of warrants | (790 | ) | — | (1,185 | ) | — | |||||||||
Unallocated corporate expenses | (994 | ) | (10,050 | ) | (3,582 | ) | (18,825 | ) | |||||||
Stock-based compensation | (5,433 | ) | (3,720 | ) | (14,202 | ) | (11,107 | ) | |||||||
Amortization of intangibles | (2,087 | ) | (2,088 | ) | (6,281 | ) | (6,232 | ) | |||||||
Income (loss) from operations | (3,651 | ) | (14,206 | ) | (12,336 | ) | (62,786 | ) | |||||||
Non-operating expense, net | (3,237 | ) | (3,292 | ) | (9,190 | ) | (9,892 | ) | |||||||
Loss before income taxes | $ | (6,888 | ) | $ | (17,498 | ) | $ | (21,526 | ) | $ | (72,678 | ) |
Three months ended | Nine months ended | ||||||||||||||||||||||||||
September 28, 2018 | September 29, 2017 | Q3 FY18 vs Q3 FY17 | September 28, 2018 | September 29, 2017 | Q3 FY18 YTD vs Q3 FY17 YTD | ||||||||||||||||||||||
Amortization of intangibles | $ | 792 | $ | 793 | $ | (1 | ) | — | % | $ | 2,396 | $ | 2,347 | $ | 49 | 2 | % | ||||||||||
As a percentage of net revenue | 0.8 | % | 0.9 | % | 0.8 | % | 0.9 | % |
Three months ended | Nine months ended | ||||||||||||||||||||||||
September 28, 2018 | September 29, 2017 | Q3 FY18 vs Q3 FY17 | September 28, 2018 | September 29, 2017 | Q3 FY18 vs Q3 FY17 | ||||||||||||||||||||
Restructuring and related charges in: | |||||||||||||||||||||||||
Cost of revenue | $ | 7 | $ | 549 | $ | (542 | ) | (99 | )% | $ | 884 | $ | 1,335 | $ | (451 | ) | (34 | )% | |||||||
Operating expenses-Restructuring and related charges | 987 | 2,028 | (1,041 | ) | (51 | )% | 2,704 | 4,084 | (1,380 | ) | (34 | )% | |||||||||||||
Total restructuring and related charges | $ | 994 | $ | 2,577 | $ | (1,583 | ) | (61 | )% | $ | 3,588 | $ | 5,419 | $ | (1,831 | ) | (34 | )% |
Three months ended | Nine months ended | ||||||||||||||||||||||||||
September 28, 2018 | September 29, 2017 | Q3 FY18 vs Q3 FY17 | September 28, 2018 | September 29, 2017 | Q3 FY18 YTD vs Q3 FY17 YTD | ||||||||||||||||||||||
Provision for (benefit from) income taxes | $ | 870 | $ | (1,915 | ) | $ | 2,785 | (145 | )% | $ | 2,839 | $ | (1,568 | ) | $ | 4,407 | (281 | )% | |||||||||
Effective income tax rate | (12.6 | )% | 10.9 | % | (13.2 | )% | 2.2 | % |
Nine months ended | |||||||
September 28, 2018 | September 29, 2017 | ||||||
Net cash provided by (used in): | |||||||
Operating activities | $ | 5,667 | $ | (5,970 | ) | ||
Investing activities | (4,599 | ) | (2,177 | ) | |||
Financing activities | 2,631 | 1,276 | |||||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | (580 | ) | 1,471 | ||||
Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 3,119 | $ | (5,400 | ) |
Payments due in each fiscal year | |||||||||||||||||||
Total Amounts Committed | 2018 (remaining three months) | 2019 and 2020 | 2021 and 2022 | Thereafter | |||||||||||||||
Convertible debt | $ | 128,250 | $ | — | $ | 128,250 | $ | — | $ | — | |||||||||
Interest on convertible debt | 12,825 | 2,565 | 10,260 | — | — | ||||||||||||||
Other debts | 20,461 | 659 | 13,675 | 5,902 | 225 | ||||||||||||||
Capital Lease | 371 | 205 | 143 | 23 | — | ||||||||||||||
Operating leases | 42,571 | 3,433 | 23,012 | 6,801 | 9,325 | ||||||||||||||
Purchase commitments | 45,140 | 29,206 | 14,022 | 1,912 | — | ||||||||||||||
TVN VDP Obligations | 3,188 | 718 | 2,470 | — | — | ||||||||||||||
Avid litigation settlement fees | 3,500 | — | 3,500 | — | — | ||||||||||||||
Total contractual obligations | $ | 256,306 | $ | 36,786 | $ | 195,332 | $ | 14,638 | $ | 9,550 | |||||||||
Other commercial commitments: | |||||||||||||||||||
Standby letters of credit | $ | 2,919 | $ | 1,016 | $ | 1,903 | $ | — | $ | — | |||||||||
Total commercial commitments | $ | 2,919 | $ | 1,016 | $ | 1,903 | $ | — | $ | — |
September 28, 2018 | December 31, 2017 | ||||||
Derivatives not designated as hedging instruments: | |||||||
Purchase | $ | 28,782 | $ | 12,875 | |||
Sell | $ | — | $ | 1,509 |
Exhibit Number | Exhibit Index |
3.1(i) | |
31.1 | |
31.2 | |
32.1* | |
32.2* | |
101 | The following materials from Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 28, 2018, formatted in Extensible Business Reporting Language (XBRL) include: |
(i) Condensed Consolidated Balance Sheets at September 28, 2018 and December 31, 2017, (ii) Condensed Consolidated Statements of Operations for the three and nine months ended September 28, 2018 and September 29, 2017, (iii) Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 28, 2018 and September 29, 2017, (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 28, 2018 and September 29, 2017, and (v) Notes to Condensed Consolidated Financial Statements. |
HARMONIC INC. | |
By: | /s/ Sanjay Kalra |
Sanjay Kalra | |
Chief Financial Officer | |
Date: November 5, 2018 |
ARTICLE I CORPORATE OFFICES | 1 | ||
1.1 | REGISTERED OFFICE | 1 | |
1.2 | OTHER OFFICES | 1 | |
ARTICLE II MEETINGS OF STOCKHOLDERS | 1 | ||
2.1 | PLACE OF MEETINGS | 1 | |
2.2 | ANNUAL MEETING | 1 | |
2.3 | SPECIAL MEETING | 2 | |
2.4 | NOTICE OF STOCKHOLDERS’ MEETINGS | 2 | |
2.5 | ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS | 2 | |
2.6 | MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE | 5 | |
2.7 | QUORUM | 6 | |
2.8 | ADJOURNED MEETING; NOTICE | 6 | |
2.9 | VOTING | 7 | |
2.10 | VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT | 7 | |
2.11 | STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING | 7 | |
2.12 | RECORD DATE FOR STOCKHOLDER NOTICE; VOTING | 8 | |
2.13 | PROXIES | 8 | |
2.14 | ORGANIZATION | 9 | |
2.15 | LIST OF STOCKHOLDERS ENTITLED TO VOTE | 9 | |
2.16 | INSPECTORS OF ELECTION | 9 | |
ARTICLE III DIRECTORS | 10 | ||
3.1 | POWERS | 10 | |
3.2 | NUMBER OF DIRECTORS | 10 | |
3.3 | ELECTION AND TERM OF OFFICE OF DIRECTORS | 10 | |
3.4 | RESIGNATION AND VACANCIES | 11 | |
3.5 | REMOVAL OF DIRECTORS | 12 | |
3.6 | PLACE OF MEETINGS; MEETINGS BY TELEPHONE | 12 | |
3.7 | FIRST MEETINGS | 12 | |
3.8 | REGULAR MEETINGS | 12 | |
3.9 | SPECIAL MEETINGS; NOTICE | 13 | |
3.10 | QUORUM | 13 | |
3.11 | WAIVER OF NOTICE | 13 | |
3.12 | ADJOURNMENT | 14 | |
3.13 | NOTICE OF ADJOURNMENT | 14 | |
3.14 | BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING | 14 | |
3.15 | FEES AND COMPENSATION OF DIRECTORS | 14 | |
3.16 | APPROVAL OF LOANS TO OFFICERS | 14 | |
3.17 | SOLE DIRECTOR PROVIDED BY CERTIFICATE OF INCORPORATION | 14 | |
ARTICLE IV COMMITTEES | 15 | ||
4.1 | COMMITTEES OF DIRECTORS | 15 | |
4.2 | MEETINGS AND ACTION OF COMMITTEES | 15 | |
4.3 | COMMITTEE MINUTES | 16 | |
ARTICLE V OFFICERS | 16 | ||
5.1 | OFFICERS | 16 | |
5.2 | ELECTION OF OFFICERS | 16 | |
5.3 | SUBORDINATE OFFICERS | 16 | |
5.4 | REMOVAL AND RESIGNATION OF OFFICERS | 16 | |
5.5 | VACANCIES IN OFFICES | 17 | |
5.6 | CHAIRMAN OF THE BOARD | 17 | |
5.7 | PRESIDENT | 17 | |
5.8 | VICE PRESIDENTS | 17 | |
5.9 | SECRETARY | 18 | |
5.10 | CHIEF FINANCIAL OFFICER | 18 | |
5.11 | ASSISTANT SECRETARY | 18 | |
5.12 | ADMINISTRATIVE OFFICERS | 19 | |
5.13 | AUTHORITY AND DUTIES OF OFFICERS | 19 | |
ARTICLE VI INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER AGENTS | 19 | ||
6.1 | INDEMNIFICATION OF DIRECTORS AND OFFICERS | 19 | |
6.2 | INDEMNIFICATION OF OTHERS | 20 | |
6.3 | INSURANCE | 20 | |
ARTICLE VII RECORDS AND REPORTS | 21 | ||
7.1 | MAINTENANCE AND INSPECTION OF RECORDS | 21 | |
7.2 | INSPECTION BY DIRECTORS | 21 | |
7.3 | ANNUAL STATEMENT TO STOCKHOLDERS | 21 | |
7.4 | REPRESENTATION OF SHARES OF OTHER CORPORATIONS | 21 | |
7.5 | CERTIFICATION AND INSPECTION OF BYLAWS | 22 | |
ARTICLE VIII GENERAL MATTERS | 22 | ||
8.1 | RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING | 22 | |
8.2 | CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS | 22 | |
8.3 | CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED | 22 | |
8.4 | STOCK CERTIFICATES; TRANSFER; PARTLY PAID SHARES | 22 | |
8.5 | SPECIAL DESIGNATION ON CERTIFICATES | 23 | |
8.6 | LOST CERTIFICATES | 24 | |
8.7 | TRANSFER AGENTS AND REGISTRARS | 24 | |
8.8 | CONSTRUCTION; DEFINITIONS | 24 | |
ARTICLE IX AMENDMENTS | 25 | ||
ARTICLE X DISSOLUTION | 25 | ||
ARTICLE XI CUSTODIAN | 25 | ||
11.1 | APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES | 25 | |
11.2 | DUTIES OF CUSTODIAN | 26 |
/s/ Timothy C. Chu |
Secretary |
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; |
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 |
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. |
By: | /s/ Patrick J. Harshman |
Patrick J. Harshman | |
President and Chief Executive Officer |
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; |
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 |
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. |
By: | /s/ Sanjay Kalra |
Sanjay Kalra | |
Chief Financial Officer |
/s/ Patrick J. Harshman |
Patrick J. Harshman |
President and Chief Executive Officer |
/s/ Sanjay Kalra |
Sanjay Kalra |
Chief Financial Officer |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 28, 2018 |
Oct. 26, 2018 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 28, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | HLIT | |
Entity Registrant Name | HARMONIC INC | |
Entity Central Index Key | 0000851310 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Common Stock, Shares Outstanding | 86,697,733 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Sep. 28, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 86,687,000 | 82,554,000 |
Common stock, shares outstanding | 86,687,000 | 82,554,000 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 28, 2018 |
Sep. 29, 2017 |
Sep. 28, 2018 |
Sep. 29, 2017 |
|
Total net revenue | $ 100,616 | $ 92,014 | $ 289,903 | $ 257,272 |
Total cost of revenue | 50,514 | 44,989 | 141,015 | 136,024 |
Total gross profit | 50,102 | 47,025 | 148,888 | 121,248 |
Operating expenses: | ||||
Research and development | 22,251 | 21,289 | 67,250 | 73,226 |
Selling, general and administrative | 29,723 | 37,121 | 88,874 | 104,377 |
Amortization of intangibles | 792 | 793 | 2,396 | 2,347 |
Restructuring and related charges | 987 | 2,028 | 2,704 | 4,084 |
Total operating expenses | 53,753 | 61,231 | 161,224 | 184,034 |
Loss from operations | (3,651) | (14,206) | (12,336) | (62,786) |
Interest expense, net | (2,872) | (2,794) | (8,492) | (8,064) |
Other expense, net | (365) | (498) | (698) | (1,828) |
Loss before income taxes | (6,888) | (17,498) | (21,526) | (72,678) |
Provision for (benefit from) income taxes | 870 | (1,915) | 2,839 | (1,568) |
Net loss | $ (7,758) | $ (15,583) | $ (24,365) | $ (71,110) |
Net loss per share: | ||||
Basic and diluted | $ (0.09) | $ (0.19) | $ (0.29) | $ (0.88) |
Shares used in per share calculation: | ||||
Basic and diluted | 86,321 | 81,445 | 85,188 | 80,618 |
Product | ||||
Total net revenue | $ 62,803 | $ 58,161 | $ 178,776 | $ 158,657 |
Total cost of revenue | 33,224 | 27,736 | 91,084 | 85,843 |
Service [Member] | ||||
Total net revenue | 37,813 | 33,853 | 111,127 | 98,615 |
Total cost of revenue | $ 17,290 | $ 17,253 | $ 49,931 | $ 50,181 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 28, 2018 |
Sep. 29, 2017 |
Sep. 28, 2018 |
Sep. 29, 2017 |
|
Net loss | $ (7,758) | $ (15,583) | $ (24,365) | $ (71,110) |
Other comprehensive income (loss) before tax: | ||||
Unrealized gain (loss) arising during the period | 0 | 8 | 0 | (605) |
Change in foreign currency translation adjustments | 447 | 2,265 | (2,577) | 7,147 |
Other comprehensive income (loss) before tax | 447 | 2,273 | (2,577) | 6,542 |
Less: Provision for (benefit from) income taxes | (78) | 0 | 291 | 2 |
Other comprehensive income (loss), net of tax | 525 | 2,273 | (2,868) | 6,540 |
Total comprehensive loss | $ (7,233) | $ (13,310) | $ (27,233) | $ (64,570) |
Basis of Presentation and Significant Accounting Policies |
9 Months Ended |
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Sep. 28, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated financial statements, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) which Harmonic Inc. (“Harmonic,” or the “Company”) considers necessary to present fairly the results of operations for the interim periods covered and the consolidated financial condition of the Company at the date of the balance sheets. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited consolidated financial statements contained in the Company’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on March 5, 2018 (the “2017 Form 10-K”). The interim results presented herein are not necessarily indicative of the results of operations that may be expected for the full fiscal year ending December 31, 2018, or any other future period. The Company’s fiscal quarters are based on 13-week periods, except for the fourth quarter, which ends on December 31. The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated balance sheet as of December 31, 2017 was derived from audited financial statements, and the unaudited condensed consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those requirements, certain footnotes or other financial information that are normally required by generally accepted accounting principles in the United States of America (“U.S. GAAP”) have been condensed or omitted. Reclassifications Certain prior period balances have been reclassified to conform to the current period’s presentation. These reclassifications did not have a material impact on previously reported financial statements. Use of Estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The Company’s reported financial positions or results of operations may be materially different under changed conditions or when using different estimates and assumptions, particularly with respect to significant accounting policies. If estimates or assumptions differ from actual results, subsequent periods are adjusted to reflect more current information. Significant Accounting Policies The Company’s significant accounting policies are described in Note 2 to its audited Consolidated Financial Statements included in the 2017 Form 10-K. There have been no significant changes to these policies during the nine months ended September 28, 2018 other than those disclosed in Note 2, “Recently Adopted Accounting Pronouncements”. |
Recent Accounting Pronouncements |
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Recent Accounting Pronouncements | RECENT ACCOUNTING PRONOUNCEMENTS Recently Adopted Accounting Pronouncements ASC Topic 606, “Revenue from Contracts with Customers” On January 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers (“Topic 606”), using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for the reporting period beginning January 1, 2018 are presented under Topic 606, while prior period amounts are not restated and continue to be reported in accordance with our historic accounting under ASC 605, Revenue Recognition (“Topic 605”). Under Topic 606, the Company began to recognize a contract asset for satisfied performance obligations that do not provide the Company with an unconditional right to consideration, which was restricted under the previous standard. In addition, the Company changed its revenue recognition for professional services from a completed contract method to a percentage of completion method. The cumulative effect of initially applying Topic 606 to the Company’s condensed consolidated balance sheet on January 1, 2018 was as follows (in thousands):
The impact from adopting Topic 606 on the Company’s condensed consolidated financial statements was as follows (in thousands):
Revenue Recognition The Company’s principal sources of revenue are from the sale of hardware, software, hardware and software maintenance contracts, and end-to-end solutions, encompassing design, manufacture, test, integration and installation of products. The Company also derives recurring revenue from subscriptions, which are comprised of subscription fees from customers utilizing the Company’s cloud-based media processing solutions. Revenue from contracts with customers is recognized using the following five steps: a) Identify the contract(s) with a customer; b) Identify the performance obligations in the contract; c) Determine the transaction price; d) Allocate the transaction price to the performance obligations in the contract; and e) Recognize revenue when (or as) the Company satisfies a performance obligation. A contract contains a promise (or promises) to transfer goods or services to a customer. A performance obligation is a promise (or a group of promises) that is distinct. The transaction price is the amount of consideration a Company expects to be entitled from a customer in exchange for providing the goods or services. The unit of account for revenue recognition is a performance obligation. A contract may contain one or more performance obligations, including hardware, software, professional services and support and maintenance. Performance obligations are accounted for separately if they are distinct. A good or service is distinct if the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and the good or service is distinct in the context of the contract. Otherwise performance obligations will be combined with other promised goods or services until the Company identifies a bundle of goods or services that is distinct. The transaction price is allocated to all the separate performance obligations in an arrangement. It reflects the amount of consideration to which the Company expects to be entitled in exchange for transferring goods or services, which may include an estimate of variable consideration to the extent that it is probable of not being subject to significant reversals in the future based on the Company’s experience with similar arrangements. The transaction price also reflects the impact of the time value of money if there is a significant financing component present in an arrangement. The transaction price excludes amounts collected on behalf of third parties, such as sales taxes. Revenue is recognized when the Company satisfies each performance obligation by transferring control of the promised goods or services to the customer. Goods or services can transfer at a point in time or over time depending on the nature of the arrangement. Deferred revenue represents the Company’s obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. Our payment terms vary by the type and location of our customer and the products or services offered. The term between invoicing and when payment is due is not significant. For certain products or services and customer types, we require payment before the products or services are delivered to the customer. Revenue recognized during the three and nine months ended September 28, 2018 that was included within the deferred revenue balance at January 1, 2018 was $7.8 million and $43.2 million, respectively. Contract assets exist when the Company has satisfied a performance obligation but does not have an unconditional right to consideration (e.g., because the entity first must satisfy another performance obligation in the contract before it is entitled to invoice the customer). Contract assets are reported as a component of “Prepaid expenses and other current assets” on the Condensed Consolidated Balance Sheets. See Note 6, “Balance Sheet Components’ for additional information. Shipping and handling costs are accounted for as a fulfillment cost and are recorded in cost of revenue in the Company’s Condensed Consolidated Statements of Operations. Hardware and Software. Revenue from the sale of hardware and software products is recognized when the control is transferred. For most of the Company’s product sales (including sales to distributors and system integrators), the control is transferred at the time the product is shipped or delivery has occurred because the customer has significant risks and rewards of ownership of the asset and the Company has a present right to payment at that time. The Company’s agreements with the distributors and system integrators have terms which are generally consistent with the standard terms and conditions for the sale of the Company’s equipment to end users, and do not provide for product rotation or pricing allowances, as are typically found in agreements with stocking distributors. The Company offers trade-in rights which are specifically identified and accrued for at the end of the period through contra-revenue. Arrangements with Multiple Performance Obligations. The Company has revenue arrangements that include multiple performance obligations. The Company allocates transaction price to all separate performance obligations based on their relative standalone selling prices (“SSP”). The Company’s best evidence for SSP is the price the Company charges for that good or service when the Company sells it separately in similar circumstances to similar customers. If goods or services are not always sold separately, the Company uses the best estimate of SSP in the allocation of transaction price. The objective of determining the best estimate of SSP is to estimate the price at which the Company would transact a sale if the product or service were sold on a standalone basis. The Company’s process for determining best estimate of SSP involves management’s judgment, and considers multiple factors including, but not limited to, major product groupings, geographies, gross margin objectives and pricing practices. Pricing practices taken into consideration include contractually stated prices, discounts offered and applicable price lists. These factors may vary over time, depending upon the unique facts and circumstances related to each deliverable. If the facts and circumstances underlying the factors considered change or should future facts and circumstances lead the Company to consider additional factors, the Company’s best estimate of SSP may also change. Solution Sales. Solution sales for the design, manufacture, test, integration and installation of products, including equipment acquired from third parties to be integrated with Harmonic’s products, that are customized to meet the customer’s specifications are accounted for based on the percentage-of-completion basis, using the input method. Some of our arrangements may include acceptance provisions that require testing of the solution against specific performance criteria. The Company performs a detailed evaluation to determine whether the arrangement involves performance criteria based on our standard performance criteria. The Company has a long-standing history of entering into contractual arrangements to deliver the solution sales based on standard performance criteria. For this type of arrangement, we consider the customer acceptance clause not substantive and recognize product revenue when the customer takes possession on the product and recognize service on a percentage-of-completion basis using the input method. However, if the solution results in significant production, modification or customization, we consider the arrangement as a single performance obligation and recognize the revenue at a point in time, depending on the complexity of the solution and nature of acceptance. Professional services. Revenue from professional services is recognized over time, on the percentage-of-completion basis using the input method. Input method. The use of the input method requires the Company to make reasonably dependable estimates. We use the input method based on labor hours, where revenue is calculated based on the percentage of total hours incurred in relation to total estimated hours at completion of the contract. The input method is reasonable because the hours best reflect the Company’s efforts toward satisfying the performance obligation over time. As circumstances change over time, the Company updates its measure of progress to reflect any changes in the outcome of the performance obligation. Such changes to an entity’s measure of progress are accounted for as a change in accounting estimates. Support and maintenance. Support and maintenance services are satisfied ratably over time as the customer simultaneously receives and consumes the benefits of the services. Contract costs. The incremental costs of obtaining a contract are capitalized if the costs are expected to be recovered. Costs that are recognized as assets are amortized straight-line over the period as the related goods or services transfer to the customer. Costs incurred to fulfill a contract are capitalized if they are not covered by other relevant guidance, relate directly to a contract, will be used to satisfy future performance obligations, and are expected to be recovered. The Company recorded a net decrease to the opening balance of accumulated deficit of $1.4 million as of January 1, 2018 for capitalizing contract costs due to the cumulative impact of adopting Topic 606 for sales commissions related to customer contracts with an amortization period in excess of one year. Anticipated contract renewals, amendments, and follow-on contracts with the same customer are considered when determining the period of amortization. The net capitalized contract costs as of September 28, 2018 were $1.8 million, of which $1.3 million and $0.5 million were reported as components of “Prepaid expenses and other current assets” and “Other long-term assets” on the Condensed Consolidated Balance Sheets, respectively. The amortization of the capitalized contract costs during the three and nine months ended September 28, 2018 was $0.4 million and $0.9 million, respectively. Significant Judgments. The Company has revenue arrangements that include promises to transfer multiple products and services to a customer. The Company may exercise significant judgment when determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together. The Company allocates the transaction price to all separate performance obligations based on the SSP of each obligation. The Company’s best evidence for SSP is the price the Company charges for that good or service when the Company sells it separately in similar circumstances to similar customers. If goods or services are not always sold separately, the Company uses the best estimate of SSP in the allocation of the transaction price. The objective of determining the best estimate of SSP is to estimate the price at which the Company would transact a sale if the product or service were sold on a standalone basis. The Company’s process for determining the best estimate of SSP involves management’s judgment, and considers multiple factors including, but not limited to, major product groupings, geographies, gross margin objectives and pricing practices. Pricing practices taken into consideration include contractually stated prices, discounts and applicable price lists. These factors may vary over time, depending upon the unique facts and circumstances related to each deliverable. If the facts and circumstances underlying the factors considered change or should future facts and circumstances lead the Company to consider additional factors, the Company’s best estimate of SSP may also change. Practical Expedients and Exemptions. Under Topic 606, incremental costs of obtaining a contract such as sales commissions are capitalized if they are expected to be recovered, and amortized on a straight-line basis. Expensing these costs as incurred is not permitted unless they qualify for a practical expedient. Other than capitalized costs of obtaining subscription contracts which are amortized regardless of the life of expected amortization period, the Company elected the practical expedient to expense the costs to obtain all other contracts as incurred, when the life of the expected amortization period is one year or less by using a portfolio approach. The Company elected the practical expedient under Topic 606 to not disclose the transaction price allocated to remaining performance obligations, since the majority of the Company’s arrangements have original expected durations of one year or less, or the invoicing corresponds to the value of the Company’s performance completed to date. The Company elected the practical expedient that allows the Company to not assess a contract for a significant financing component if the period between the customer’s payment and the transfer of the goods or services is one year or less. See Note 14, “Segment Information” for further disaggregated revenue information. Other Recently Adopted Accounting Pronouncements In January 2016, the Financial Accounting Standards Board (“FASB) issued Accounting Standards Updated (“ASU”) No. 2016-01, Financial Instruments (Topic 825): Recognition and Measurement of Financial Assets and Financial Liabilities, which requires equity investments to be measured at fair value with changes in fair value recognized in net income and simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. The Company adopted this new standard in the first quarter of fiscal 2018, and the adoption did not have a material impact on its condensed consolidated financial statements. See Note 3, “Investments in Equity Securities” for additional information. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires entities to present the aggregate changes in cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, the statement of cash flows will be required to present restricted cash and restricted cash equivalents as a part of the beginning and ending balances of cash and cash equivalents. The Company adopted this new standard in the first quarter of fiscal 2018 on a retrospective basis. The Company’s total restricted cash balance was $0.2 million and $1.7 million as of September 28, 2018 and December 31, 2017, respectively. The Company’s total restricted cash balance was $2.0 million and $1.8 million as of September 29, 2017 and December 31, 2016, respectively. These restricted cash balances are presented as a part of the ending and beginning balances of cash, cash equivalents and restricted cash on the Company’s Condensed Consolidated Statements of Cash Flows for the corresponding periods. See Note 6, “Balance Sheet Components” for additional information. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The objective of ASU 2017-01 is to clarify the definition of a business in order to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill and consolidation. The Company adopted this new standard in the first quarter of fiscal 2018, and the adoption had no impact on its condensed consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that Is a Service Contract. This new standard requires an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. Costs for implementation activities in the application development stage can be capitalized depending on the nature of the costs, while costs incurred during the preliminary project and post-implementation stages are expensed as the activities are performed. The costs capitalized are expensed over the term of the hosting arrangement. The amendments in the new ASU also require the entity to present the expense related to the capitalized implementation costs in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement and classify payments for capitalized implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting element. This new standard is effective for the Company for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years and should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Early adoption is permitted, including adoption in any interim period. The Company early adopted this new standard in the third quarter of fiscal 2018 and applied it prospectively to all implementation costs incurred after the date of adoption. The adoption of this standard did not have a significant impact on the Company’s condensed consolidated financial statements as of, and for the three and nine months ended September 28, 2018. Recently Issued Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), to amend the existing accounting standard for lease accounting. This new standard will require lessees to recognize most leases on their balance sheets as a right-of-use asset with a corresponding lease liability, and lessors to recognize a net lease investment. Additional qualitative and quantitative disclosures will also be required. The new ASU will be effective for the Company beginning in the first quarter of fiscal 2019 and early adoption is permitted. The new standard requires a modified retrospective transition and allows a cumulative-effect adjustment to the opening balance of retained earnings during the period of adoption. The Company is in the process of analyzing the impact of this standard, including its current accounting policies and practices to identify potential impacts that would result from the application of this standard. The Company’s adoption process of the new standard is ongoing, including evaluating and quantifying the impact on its consolidated financial statements, identifying the population of leases (and embedded leases), and collecting and validating lease data. The Company expects that majority of its lease obligations designated as operating leases will be reported on its Consolidated Balance Sheets upon adoption. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets and certain other instruments. For trade receivables and other instruments, the Company will be required to use a new forward-looking “expected loss” model. Additionally, credit losses on available-for-sale debt securities should be recorded through an allowance for credit losses limited to the amount by which fair value is below amortized cost. The new ASU will be effective for the Company beginning in the first quarter of fiscal 2020 and early adoption is permitted. The adoption of the new ASU is not expected to have a material impact on the Company’s consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The new ASU removes Step 2 of the goodwill impairment test and requires the assessment of fair value of individual assets and liabilities of a reporting unit to measure goodwill impairments. Goodwill impairment will then be the amount by which a reporting unit's carrying value exceeds its fair value. The new ASU will be effective for the Company beginning in the first quarter of fiscal 2020 on a prospective basis, and early adoption is permitted. The Company is currently evaluating the impact of adopting the new ASU on its consolidated financial statements. In June 2018, the FASB issued ASU No. 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. The new ASU expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost. The new ASU will be effective for the Company beginning in the first quarter of fiscal 2019 and early adoption is permitted. The Company is currently evaluating the impact of adopting this new standard on its consolidated financial statements. In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. This final rule is effective on November 5, 2018. The release expanded the disclosure requirements on the analysis of stockholders' equity for interim financial statements. Under the release, an analysis of changes in each caption of stockholders' equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. According to the release, the staff of the SEC will not object if a filer’s first presentation of changes in shareholders’ equity is included in its Quarterly Report on Form 10-Q for the quarter that begins after the final rule’s effective date. The Company plans to first include the changes required by this release in its Quarterly Report on Form 10-Q for the first quarter of fiscal 2019. |
Investments in Equity Securities |
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Sep. 28, 2018 | |
Investments, All Other Investments [Abstract] | |
Investments in Equity Securities | INVESTMENTS IN EQUITY SECURITIES Vislink In 2014, the Company acquired a 3.3% interest in Vislink plc (“Vislink”), a U.K. public company listed on the AIM exchange, for $3.3 million. On February 3, 2017, Vislink completed the disposal of its hardware division and changed its name to Pebble Beach Systems (“PBS”). The Company does not have significant influence over PBS’s operational and financial policies. The carrying value of the investment in PBS was fully written off as of December 31, 2017. Beginning the first quarter of fiscal 2018, the Company adopted ASU No. 2016-01, Financial Instruments (Topic 825): Recognition and Measurement of Financial Assets and Financial Liabilities, which requires equity investments to be measured at fair value with changes in fair value recognized in net income. As a result of adopting this new standard, the Company started measuring the investment in PBS at fair value based on its quoted stock price on the AIM exchange with gains or losses from changes in fair value recognized in net income. The Company sold this investment for $0.1 million in the third quarter of fiscal 2018. The Company recorded a loss of $0.1 million and a gain of $0.1 million related to this investment in Other expense, net during the three and nine months ended September 28, 2018. Unconsolidated Variable Interest Entities (“VIE”) EDC In 2014, the Company acquired an 18.4% interest in Encoding.com, Inc. (“EDC”), a privately held video transcoding service company headquartered in San Francisco, California, for $3.5 million by purchasing EDC’s Series B preferred stock. EDC is considered a VIE but the Company determined that it is not the primary beneficiary of EDC. As a result, EDC is measured at its cost minus impairment, if any. The Company determined that there were no indicators at September 28, 2018 that the EDC investment was impaired. |
Derivative and Hedgiing Activities Derivative and Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure | DERIVATIVES AND HEDGING ACTIVITIES The Company uses forward contracts to manage exposures to foreign currency exchange rates. The Company’s primary objective in holding derivative instruments is to reduce the volatility of earnings and cash flows associated with fluctuations in foreign currency exchange rates and the Company does not use derivative instruments for trading purposes. The use of derivative instruments exposes the Company to credit risk to the extent that the counterparties may be unable to meet their contractual obligations. As such, the potential risk of loss with any one counterparty is closely monitored by the Company. Derivatives Not Designated as Hedging Instruments (Balance Sheet Hedges) The Company’s balance sheet hedges consist of foreign currency forward contracts that generally mature within three months, are carried at fair value, and are used to minimize the short-term impact of foreign currency exchange rate fluctuation on cash and certain trade and inter-company receivables and payables. Changes in the fair value of these foreign currency forward contracts are recognized in “Other expense, net” in the Condensed Consolidated Statement of Operations and are largely offset by the changes in the fair value of the assets or liabilities being hedged. Gains (losses) on the non-designated derivative instruments recognized during the periods presented were as follows (in thousands):
The U.S. dollar equivalents of all outstanding notional amounts of foreign currency forward contracts, including the Euro, British pound, Israeli shekel and Japanese yen, are summarized as follows (in thousands):
The locations and fair value amounts of the Company’s derivative instruments reported in its Condensed Consolidated Balance Sheets are as follows (in thousands):
Offsetting of Derivative Assets and Liabilities The Company recognizes all derivative instruments on a gross basis in the Condensed Consolidated Balance Sheets. However, the arrangements with its counterparties allows for net settlement, which are designed to reduce credit risk by permitting net settlement with the same counterparty. As of September 28, 2018, information related to the offsetting arrangements was as follows (in thousands):
In connection with foreign currency derivatives entered in Israel, the Company’s subsidiaries in Israel are required to maintain a compensating balance with their bank at the end of each month. The compensating balance arrangements do not legally restrict the use of cash. As of September 28, 2018, the total compensating balance maintained was $1.0 million. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | FAIR VALUE MEASUREMENTS The authoritative accounting guidance establishes a framework for measuring fair value and requires disclosure about the fair value measurements of assets and liabilities. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants on the measurement date. This guidance requires the Company to classify and disclose assets and liabilities measured at fair value on a recurring basis, as well as fair value measurements of assets and liabilities measured on a nonrecurring basis in periods subsequent to initial measurement, in a three-tier fair value hierarchy as described below. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The guidance describes three levels of inputs that may be used to measure fair value:
The following table sets forth the fair value of the Company’s financial assets and liabilities measured at fair value on a recurring basis based on the three-tier fair value hierarchy (in thousands):
The Company’s liability for the TVN VDP (as defined below) was $3.2 million and $5.1 million as of September 28, 2018 and December 31, 2017, respectively. This amount is not included in the table above because its fair value at inception, based on Level 3 inputs, was determined during the fourth quarter of fiscal 2016. There has been no recurring fair value re-measurement for this liability subsequently based on the applicable accounting guidance. See Note 8, “Restructuring and related charges-TVN VDP,” for additional information on the Company’s TVN VDP liabilities. The carrying value of the Company’s financial instruments, including cash equivalents, restricted cash, accounts receivable, accounts payable and accrued and other current liabilities, approximate fair value due to their short maturities. The Company uses the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The fair value of the Company’s convertible notes is influenced by interest rates, the Company’s stock price and stock market volatility. The fair value of the Company’s convertible notes was approximately $148.6 million and $129.9 million as of September 28, 2018 and December 31, 2017, respectively, and represents a Level 2 valuation. The Company’s other debts assumed from the Thomson Video Networks (“TVN”) acquisition are classified within Level 2 because these borrowings are not actively traded and the majority of them have a variable interest rate structure based upon market rates currently available to the Company for debt with similar terms and maturities, therefore, the carrying value of these debts approximate its fair value. The other debts, excluding capital leases, outstanding as of September 28, 2018 and December 31, 2017 were in the aggregate of $20.5 million and $21.8 million, respectively. (See Note 9, “Convertible Notes, Other debts and Capital Leases” for additional information). During the nine months ended September 28, 2018, there were no nonrecurring fair value measurements of assets and liabilities subsequent to initial recognition. |
Balance Sheet Components |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Components | BALANCE SHEET COMPONENTS The following tables provide details of selected balance sheet components (in thousands):
(1) The Company’s TVN subsidiary in France (the “TVN French Subsidiary”) participates in the French Crédit d’Impôt Recherche program (the “R&D tax credits”) which allows companies to monetize eligible research expenses. The R&D tax credits can be used to offset against income tax payable to the French government in each of the four years after being incurred, or if not utilized, are recoverable in cash. The amount of R&D tax credits recoverable are subject to audit by the French government. The R&D tax credits receivable at September 28, 2018 were approximately $25.6 million and are expected to be recoverable from 2019 through 2022 with $7.5 million reported as a component of “Prepaid expenses and other current assets” and $18.1 million reported as a component of “Other long-term assets” on the Company’s Condensed Consolidated Balance Sheets. (2) Contract assets reflect the satisfied performance obligations for which the Company does not yet have an unconditional right to consideration. (3) Amounts represent cash collateral security for certain bank guarantees. These restricted funds are invested in bank deposits and cannot be withdrawn from the Company’s accounts without the prior written consent of the applicable secured party.
(1) As of December 31, 2017, the Company had approximately $1.2 million of restricted cash for the bank guarantee associated with the TVN French Subsidiary’s office building lease. The restriction was subsequently released and accordingly, the amount was reclassified to “Cash and cash equivalents” in the nine months ended September 28, 2018.
(1) See Note 8, “Restructuring and related charges-TVN VDP,” for additional information on the Company’s TVN VDP liabilities. |
Goodwill and Identified Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Identified Intangible Assets | GOODWILL AND IDENTIFIED INTANGIBLE ASSETS Goodwill Goodwill represents the difference between the purchase price and the estimated fair value of the identifiable assets acquired and liabilities assumed. Goodwill is allocated among and evaluated for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment. The Company has two reporting units, Video and Cable Access. The Company tests for goodwill impairment at the reporting unit level on an annual basis in the fiscal fourth quarter, or more frequently, if events or changes in circumstances indicate that the asset is more likely than not impaired. The Company performed its annual goodwill impairment review at the reporting unit level as of October 31, 2017, with no goodwill impairment indicated. There were no events or circumstances which triggered additional impairment reviews for the periods presented. The changes in the carrying amount of goodwill by reportable segments for the nine months ended September 28, 2018 were as follows (in thousands):
Intangible Assets, Net The following is a summary of intangible assets, net (in thousands):
Amortization expense for the identifiable purchased intangible assets for the three and nine months ended September 28, 2018 and September 29, 2017 was allocated as follows (in thousands):
The estimated future amortization expense of purchased intangible assets with definite lives is as follows (in thousands):
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Restructuring and Related Charges |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Charges | RESTRUCTURING AND RELATED CHARGES The Company has implemented several restructuring plans in the past few years. The goal of these plans was to bring operational expenses to appropriate levels relative to its net revenues, while simultaneously implementing extensive company-wide expense control programs. The Company accounts for its restructuring plans under the authoritative guidance for exit or disposal activities. The restructuring and related charges are included in “Cost of revenue” and “Operating expenses - Restructuring and related charges” in the Condensed Consolidated Statements of Operations. The following table summarizes the restructuring and related charges (in thousands):
As of September 28, 2018 and December 31, 2017, the Company’s total restructuring liability was $6.4 million and $8.0 million, respectively, of which $3.8 million and $4.4 million, respectively, were reported as a component of “Accrued and other current liabilities”, and the remaining $2.6 million and $3.6 million, respectively, were reported as a component of “Other non-current liabilities” on the Company’s Condensed Consolidated Balance Sheets. The following table summarizes the activities related to the Company’s restructuring plans during the nine months ended September 28, 2018 (in thousands):
Harmonic 2018 Restructuring In the first quarter of 2018, the Company approved and implemented a restructuring plan (the “Harmonic 2018 Restructuring Plan”). The restructuring activities under this plan primarily include worldwide workforce reductions of the Company. As of September 28, 2018, the Company recorded an aggregate amount of $2.1 million of restructuring and related charges for severance and employee benefits for 59 employees worldwide, primarily in the United States and across all functions. The Company made $2.0 million in payments for this plan in the nine months ended September 28, 2018. The activities under this plan are expected to be completed in 2018. Excess Facility in San Jose, California In August 2018, the Company exited an additional excess facility at its U.S. headquarters in San Jose, California and recorded $0.9 million in facility exit costs. The Company accounts for facility exit costs in accordance with ASC 420, “Exit or Disposal Cost Obligations”, which requires that a liability for such costs be recognized and measured initially at fair value on the cease-use date based on remaining lease rentals, adjusted for the effects of any prepaid or deferred items recognized, reduced by the estimated sublease rentals that could be reasonably obtained even if it is not the intent to sublease. The fair value of these liabilities is based on a net present value model using a credit-adjusted, risk-free rate. The liability will be paid out over the remainder of the leased properties’ terms, which continue through August 2020. Actual sublease terms may differ from the estimates originally made by the Company. Any future changes in the estimates or in the actual sublease income could require future adjustments to the liabilities, which would impact net income in the period the adjustment is recorded. As of the cease-use date, the fair value of this restructuring liability totaled $1.2 million. Offsetting these charges was an adjustment for deferred rent liability relating to this space of $0.3 million. Harmonic 2017 Restructuring In the third quarter of 2017, the Company implemented a restructuring plan (the “Harmonic 2017 Restructuring Plan”) to better align its operating costs with the continued decline in its net revenues. In 2017, the Company recorded $2.5 million of restructuring and related charges under this plan, consisting of $2.1 million of employee severance and $0.4 million related to the closure of one of the Company’s offices in New York. The activities under this plan were completed in 2017. As of September 28, 2018, the remaining $0.2 million liability outstanding relates to the accrual for the New York excess facility, which will be paid out over the remainder of the New York leased property’s term through August 2020. Harmonic 2016 Restructuring In the first quarter of 2016, the Company implemented a restructuring plan (the “Harmonic 2016 Restructuring Plan”) to reduce operating costs by consolidating duplicative resources in connection with the acquisition of TVN. The planned activities included global workforce reductions, exiting certain operating facilities and disposing of excess areas, and an employee voluntary departure plan in France (the “TVN VDP”). In 2016, the Company recorded an aggregate of $20.0 million of restructuring and related charges under the Harmonic 2016 Restructuring Plan, of which $2.2 million was primarily related to the Company exiting from an excess facility at its U.S. headquarters and the remaining $17.8 million was related to severance and benefits for the termination of 118 employees worldwide, including 83 employees in France who participated in the TVN VDP. The restructuring and related charges under the Harmonic 2016 Restructuring Plan in 2016 were partially offset by approximately $2.0 million of gain from TVN pension curtailment. TVN VDP The Company recorded $0.5 million and $1.8 million of TVN VDP costs in the nine months ended September 28, 2018 and September 29, 2017, respectively. The TVN VDP liability balance as of September 28, 2018 was $3.2 million, payable from 2018 through 2020. Excess Facility in San Jose, California In January 2016, the Company exited an excess facility at its U.S. headquarters in San Jose, California and recorded $1.4 million of facility exit costs. The fair value of this liability is based on a net present value model using a credit-adjusted, risk-free rate. The liability will be paid out over the remainder of the leased properties’ term, which continues through August 2020. As of the cease-use date, the fair value of this restructuring liability totaled $2.5 million. Offsetting this charge was an adjustment for deferred rent liability relating to this space of $1.1 million. As a result of a change in the estimate of the sublease income, the restructuring liability was increased by $1.2 million as of December 31, 2017. |
Convertible Notes, Other Debts And Capital Leases |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Notes, Other Debts And Capital Leases | CONVERTIBLE NOTES, OTHER DEBTS AND CAPITAL LEASES 4.00% Convertible Senior Notes In December 2015, the Company issued $128.25 million in aggregate principal amount of 4.0% unsecured convertible senior notes due December 1, 2020 (the “offering” or “Notes”, as applicable) through a private placement with a financial institution. The Notes do not contain any financial covenants and the Company can settle the Notes in cash, shares of common stock, or any combination thereof. The Notes can be converted under certain circumstances described below, based on an initial conversion rate of 173.9978 shares of common stock per $1,000 principal amount of Notes (which represents an initial conversion price of approximately $5.75 per share). Interest on the Notes is payable semiannually in arrears on June 1 and December 1 of each year. Concurrent with the closing of the offering, the Company used $49.9 million of the net proceeds to repurchase 11.1 million shares of the Company’s common stock from purchasers of the offering in privately negotiated transactions. In addition, the Company incurred approximately $4.1 million in debt issuance costs, resulting in net proceeds to the Company of approximately $74.2 million, which was used to fund the acquisition of our France subsidiary, TVN. Prior to September 1, 2020, holders of the Notes may convert the Notes at their option only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ending on April 1, 2016, if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price of the Notes on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events. Commencing on September 1, 2020 until the close of business on the second scheduled trading day immediately preceding the maturity date, the Notes will be convertible in multiples of $1,000 principal amount regardless of the foregoing circumstances. If a fundamental change occurs, holders of the Notes may require the Company to purchase all or any portion of their Notes for cash at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, if specific corporate events occur prior to the maturity date, the conversion rate may be increased for a holder who elects to convert the Notes in connection with such a corporate event. In accordance with the accounting guidance on embedded conversion features, the conversion feature associated with the Notes was valued at $26.1 million and bifurcated from the host debt instrument and recorded in stockholders’ equity. The resulting debt discount on the Notes is being amortized to interest expense at the effective interest rate over the contractual term of the Notes. The following table presents the components of the Notes as of September 28, 2018 and December 31, 2017 (in thousands, except for years and percentages):
The following table presents interest expense recognized for the Notes (in thousands):
Other Debts and Capital Leases The Company has a variety of debt and credit facilities in France to satisfy the financing requirements of TVN operations. These arrangements are summarized in the table below (in thousands):
(1) As of September 28, 2018 and December 31, 2017, loans backed by French R&D tax credit receivables were $17.0 million and $17.7 million, respectively. As of September 28, 2018, the TVN French Subsidiary had an aggregate of $25.6 million of R&D tax credit receivables from the French government from 2018 through 2022. See Note 6, “Balance Sheet Components” for additional information. These tax loans have a fixed rate of 0.6%, plus EURIBOR 1 month + 1.3% and mature between 2019 through 2021. The remaining loans of $2.4 million at September 28, 2018, primarily relate to financial support from French government agencies for R&D innovation projects at minimal interest rates, and these loans mature between 2019 through 2025. Future minimum repayments The table below presents the future minimum repayments of debts and capital lease obligations for TVN as of September 28, 2018 (in thousands):
Line of Credit On September 27, 2017, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Silicon Valley Bank (the “Bank”). The Loan Agreement provides for a secured revolving credit facility in an aggregate principal amount of up to $15.0 million. Under the terms of the Loan Agreement, the principal amount of loans, plus the face amount of any outstanding letters of credit, at any time cannot exceed up to 85% of the Company’s eligible receivables. Under the terms of the Loan Agreement, the Company may also request letters of credit from the Bank. The proceeds of any loans under the Loan Agreement will be used for working capital and general corporate purposes. Loans under the Loan Agreement will bear interest, at the Company’s option, and subject to certain conditions, at an annual rate of either a prime rate or a LIBOR rate plus an applicable margin of 2.25%. There will be no applicable margin for prime rate advances when the Company is in compliance with the liquidity requirement of at least $20.0 million in the aggregate of consolidated cash plus availability under the Loan Agreement (the “Liquidity Requirement”) and a 0.25% margin for prime rate advances when the Company is not in compliance with the Liquidity Requirement. The Company may not request LIBOR advances when it is not in compliance with the Liquidity Requirement. Interest on each advance is due and payable monthly and the principal balance is due at maturity. The Company’s obligations under the revolving credit facility are secured by a security interest on substantially all of its assets, excluding intellectual property. The Loan Agreement contains customary affirmative and negative covenants. The Company must comply with financial covenants requiring it to maintain (i) a short-term asset to short-term liabilities ratio of at least 1.10 to 1.00 and (ii) a minimum adjusted EBITDA, in the amounts and for the periods as set forth in the Loan Agreement. The Company must also maintain a minimum liquidity amount, comprised of unrestricted cash held at accounts with the Bank plus proceeds available to be drawn under the Loan Agreement, equal to at least $10.0 million at all times. As of September 28, 2018, the Company was in compliance with the covenants under the Loan Agreement. As of September 28, 2018, the Company committed $2.7 million towards security for letters of credit issued under the Loan Agreement. There were no other borrowings under the Loan Agreement as of September 28, 2018. |
Employee Benefit Plans and Stock-based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans and Stock-based compensation | EMPLOYEE BENEFIT PLANS AND STOCK-BASED COMPENSATION Equity Award Plans The Company’s stock benefit plans include the 2002 Employee Stock Purchase Plan (“ESPP”) and current active stock plans adopted in 1995 and 2002. See Note 12, “Employee Benefit Plans and Stock-based Compensation” of Notes to Consolidated Financial Statements in the 2017 Form 10-K for details pertaining to each plan. The Company’s stockholders approved an amendment to the ESPP at the 2018 annual meeting of stockholders (the “2018 Annual Meeting”) to increase the number of shares of common stock reserved for issuance under the ESPP by 1,300,000 shares. The Company’s stockholders also approved an amendment to the 2002 Director Stock Plan at the 2018 Annual Meeting to increase the number of shares of common stock reserved for issuance thereunder by 400,000 shares. As of September 28, 2018, there were 1.3 million and 4.5 million shares of common stock reserved for future grants under the Company’s ESPP and active stock plans, respectively. Stock Option Activities The following table summarizes the Company’s stock option activities and related information during the nine months ended September 28, 2018 (in thousands, except per share amounts and terms):
The aggregate intrinsic value disclosed above represents the difference between the exercise price of the options and the fair value of the Company’s common stock. There were no employee stock options granted in the nine months ended September 28, 2018. There were no realized tax benefits attributable to stock options exercised in jurisdictions where this expense is deductible for tax purposes for the three and nine months ended September 28, 2018 and September 29, 2017, respectively. Restricted Stock Units (“RSUs”) Activities The following table summarizes the Company’s RSUs activities and related information during the nine months ended September 28, 2018 (in thousands, except per share amounts and terms):
Performance- and Market-based awards Starting in 2015, the Company began to settle a portion of its incentive bonus payments to eligible employees by issuing performance-based RSU awards (“PRSUs”) from the 1995 Stock Plan. The Company granted 1,443,168 PRSUs to certain employees for the nine months ended September 28, 2018, of which 1,343,168 shares of PRSUs were fully vested at the time of grant for purposes of settling amounts earned under the Company’s 2017 and 2018 incentive bonus plans. The vesting of the remaining PRSUs will be based on the achievement of certain financial and non-financial operating goals of the Company. The stock-based compensation recognized for PRSUs was $2.6 million and $6.0 million for the three and nine months ended September 28, 2018, respectively. The unrecognized stock-based compensation of PRSUs as of September 28, 2018 was $0.2 million. In 2017, the Company granted 344,500 market-based RSUs (“MRSUs”) under the 1995 Stock Plan to its key executives and certain eligible employees that may vest during a three-year period as part of its long-term incentive program. In the second quarter of 2018, the Company granted 40,000 MRSUs that may vest during an eighteen-month period from the date of grant. The vesting conditions of these awards are based on the market value of the Company's common stock. The aggregate grant-date fair value of these shares was estimated to be $1.3 million using a Monte-Carlo simulation, which is being recognized over a weighted-average period of approximately 1.3 years. The stock-based compensation recognized for MRSUs for the three and nine months ended September 28, 2018 was $36,775 and $0.2 million, respectively. The unrecognized stock-based compensation of the MRSUs as of September 28, 2018 was immaterial. No MRSUs had vested as of September 28, 2018. French Retirement Benefit Plan The Company assumed obligations under a defined benefit pension plan in connection with the acquisition of TVN in 2016. The plan is unfunded and there are no contributions required by laws or funding regulations, discretionary contributions or non-cash contributions expected to be made. The table below presents the components of net periodic benefit costs (in thousands):
The present value of the Company’s pension obligation as of September 28, 2018 was $5.1 million, of which $0.1 million was reported as a component of “Accrued and other current liabilities” and $5.0 million was reported as a component of “Other non-current liabilities” on the Company’s Condensed Consolidated Balance Sheets. The present value of the Company’s pension obligation as of December 31, 2017 was $5.0 million. 401(k) Plan The Company has a retirement/savings plan for its U.S. employees, which qualifies as a thrift plan under Section 401(k) of the Internal Revenue Code. This plan allows participants to contribute up to the applicable Internal Revenue Code limitations under the plan. The Company has made discretionary contributions to the plan of 25% of the first 4% contributed by eligible participants, up to a maximum contribution per participant of $1,000 per year. The contributions for the nine months ended September 28, 2018 and September 29, 2017 were $259,000 and $326,000, respectively. Stock-based Compensation The following table summarizes stock-based compensation for all plans (in thousands):
As of September 28, 2018, total unrecognized stock-based compensation cost related to unvested stock options and RSUs was $10.9 million and is expected to be recognized over a weighted-average period of approximately 1.6 years. Prior to January 1, 2017, stock-based compensation expense was recorded net of estimated forfeitures in the Company’s Condensed Consolidated Statements of Operations and, accordingly, was recorded for only those stock-based awards that the Company expected to vest. Upon the adoption of ASU 2016-09, “Improvements to Employee Share-Based Payments” issued by FASB, effective January 1, 2017, the Company changed its accounting policy to account for forfeitures as they occur. The change was applied on a modified retrospective approach with a cumulative effect adjustment of $69,000 as of January 1, 2017 (which increased the accumulated deficit). Valuation Assumptions The Company estimates the fair value of employee stock options and stock purchase rights under the ESPP using a Black-Scholes option valuation model. The value of the stock purchase rights under the ESPP consists of: (1) the 15% discount on the purchase of the stock; (2) 85% of the fair value of the call option; and (3) 15% of the fair value of the put option. The call option and put option were valued using the Black-Scholes option pricing model. At the date of grant, the Company estimated the fair value of each stock option grant and stock purchase right granted under the ESPP using the following weighted average assumptions:
The expected term of the employee stock options represents the weighted-average period that the stock options are expected to remain outstanding. The computation of the expected term was determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior. The expected term of the stock purchase rights under the ESPP represents the period of time from the beginning of the offering period to the purchase date. The Company uses its historical volatility for a period equivalent to the expected term of the options to estimate the expected volatility. The risk-free interest rate assumption is based on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term. The Company has not paid and does not plan to pay any cash dividends in the foreseeable future. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | INCOME TAXES The Company reported the following operating results for the periods presented (in thousands):
The Company operates in multiple jurisdictions and its profits are taxed pursuant to the tax laws of these jurisdictions. The Company’s effective income tax rate may be affected by changes in, or interpretations of tax laws and tax agreements in any given jurisdiction, utilization of net operating loss and tax credit carry forwards, changes in geographical mix of income and expense, and changes in management’s assessment of matters such as the ability to realize deferred tax assets. The Company’s effective tax rate varies from year to year primarily due to the absence of several onetime, discrete items that benefited or decremented the tax rates in the previous years. The Company's effective income tax rate of (13.2)% for the nine months ended September 28, 2018 was different from the U.S. federal statutory rate of 21%, primarily due to the Company’s geographical income mix and tax rates associated with certain earnings from operations in lower-tax jurisdictions, the increase in the valuation allowance against U.S. federal, California and other state deferred tax assets, detriment from non-deductible stock-based compensation, and the net of various discrete tax adjustments. For the nine months ended September 28, 2018, the discrete adjustments to the Company's tax expense were primarily withholding taxes. The Company’s effective income tax rate of 2.2% for the nine months ended September 29, 2017 was different from the U.S. federal statutory rate of 35%, primarily due to the Company’s geographical income mix and tax rates associated with certain earnings from operations in lower-tax jurisdictions, partially offset by the increase in the valuation allowance against U.S. federal, California and other state deferred tax assets and detriment from non-deductible stock-based compensation. In addition, in the first quarter of 2017, the Company was able to recognize a one-time tax benefit of approximately $1.2 million as a result of the merger of the Company’s two subsidiaries in Israel, which was approved by the Israeli government in the first quarter of 2017. In the third quarter of 2017, the Company recorded $2.4 million of tax benefit associated with the release of tax reserves for uncertain tax positions resulting from the expiration of the statutes of limitations on the Company’s U.S. corporate tax returns for the 2013 tax year. For the nine months ended September 29, 2017, the remaining discrete adjustments to the Company's tax expense were primarily withholding taxes and the accrual of interest on uncertain tax positions. The Company files U.S. federal and state, and foreign income tax returns in jurisdictions with varying statutes of limitations during which such tax returns may be audited and adjusted by the relevant tax authorities. The 2014 through 2017 tax years generally remain subject to examination by U.S. federal and most state tax authorities. In significant foreign jurisdictions, the 2007 through 2017 tax years generally remain subject to examination by their respective tax authorities. If, upon the conclusion of an audit, the ultimate determination of taxes owed in the jurisdictions under audit is for an amount in excess of the tax provision the Company has recorded in the applicable period, the Company’s overall tax expense, effective tax rate, operating results and cash flow could be materially and adversely impacted in the period of adjustment. On July 27, 2015, the U.S. Tax Court issued an opinion in Altera Corp. v. Commissioner, 145 T.C. No.3 (2015) related to the treatment of stock-based compensation expense in an intercompany cost-sharing arrangement. A final decision was entered by the U.S. Tax Court on December 1, 2015 (the “2015 Decision”). On February 19, 2016, the U.S. Internal Revenue Service filed a notice of appeal in Altera Corp. v. Commissioner, 145 T.C. No. 3 (2015), to the Ninth Circuit Court of Appeals. The Ninth Circuit was to decide whether a regulation that mandates that stock-based compensation costs related to the intangible development activity of a qualified cost sharing arrangement (a “QCSA”) must be included in the joint cost pool of the QCSA (the “all costs rule”) is consistent with the arm’s length standard as set forth in Section 482 of the Internal Revenue Code. On July 24, 2018, the Ninth Circuit Court of Appeals issued an opinion in Altera Corp. v. Commissioner (the “Altera Opinion”) requiring related parties in an intercompany cost-sharing arrangement to share expenses related to share-based compensation. This opinion reversed the 2015 Decision of the United States Tax Court. The Ninth Circuit subsequently withdrew the opinion on August 7, 2018. Due to uncertainties surrounding the ultimate resolution of the 2015 Decision, the Company continues to share expenses related to share-based compensation despite the 2015 Decision. The Company’s operations in Switzerland are subject to a reduced tax rate under the Switzerland tax holiday which requires various thresholds of investment and employment in Switzerland. The Company has met these various thresholds and the Switzerland tax holiday is effective through the end of 2018. As of September 28, 2018, the total amount of gross unrecognized tax benefits, including interest and penalties, was approximately $17.6 million, of which $4.8 million would affect the Company’s effective tax rate if the benefits are eventually recognized. The remaining gross unrecognized tax benefit does not affect the Company’s effective tax rate as it relates to positions that would be settled with tax attributes such as net operating loss carryforward or tax credits previously subject to a valuation allowance. The Company recognizes interest and penalties related to unrecognized tax positions in income tax expense. The Company had $0.5 million of gross interest and penalties accrued as of September 28, 2018. The Company will continue to review its tax positions and provide for, or reverse, unrecognized tax benefits as issues arise. For the nine months ended September 28, 2018, the Company released $1.5 million from a 2013-2015 audit settlement in Israel and $0.3 million due to the expiration of the statutes of limitations on the Company’s U.S. corporate tax returns for the 2013 tax year. In March 2016, the FASB issued ASU 2016-09, an accounting standard update for the accounting of share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The new standard eliminated the requirement to report excess tax benefits and certain tax deficiencies related to share-based payment transactions as additional paid-in capital. It also removes the requirement to delay recognition of a windfall tax benefit until it reduces current taxes payable. Under the new guidance, the benefit will be recorded when it arises, subject to normal valuation allowance considerations. The Company adopted this new accounting standard beginning in the first quarter of fiscal 2017 using a modified-retrospective transition method and recorded a cumulative effect of $4.6 million of additional gross deferred tax assets associated with shared-based payments and an offsetting valuation allowance of the same amount, therefore resulting in no net impact to the Company’s beginning retained earnings. In October 2016, the FASB issued ASU 2016-16, an accounting standard update which requires companies to recognize the income tax consequences of all intra-entity sales of assets other than inventory when they occur. As a result, a reporting entity would recognize the tax expense from the sale of the asset in the seller’s tax jurisdiction when the transfer occurs, even though the pre-tax effects of that transaction are eliminated in consolidation. Any deferred tax assets that arise in the buyer’s jurisdiction would also be recognized at the time of the transfer. The Company early adopted this accounting standard update during the first quarter of fiscal 2017 on a modified retrospective approach and recorded a cumulative-effect adjustment of $1.4 million to retained earnings as of January 1, 2017 (which reduced the accumulated deficit). Correspondingly, in the first quarter of fiscal 2017, the Company recognized an additional $1.1 million of net deferred tax assets, after netting with $2.1 million of valuation allowances, and wrote off the remaining $0.3 million of unamortized tax expenses deferred under the previous guidance to provision for income taxes in the first quarter of fiscal 2017. |
Net Loss Per Share |
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Income (Loss) Per Share | NET LOSS PER SHARE The following table sets forth the computation of the basic and diluted net loss per share (in thousands, except per share amounts):
Basic and diluted net loss per share were the same for the three and nine months ended September 28, 2018 and September 29, 2017, as the inclusion of potential common shares outstanding would have been anti-dilutive due to the Company’s net losses for the periods presented. The following table sets forth the potential weighted common shares outstanding that were excluded from the computation of basic and diluted net loss per share calculations (in thousands):
(1) On September 26, 2016, in connection with the execution of a product supply agreement pursuant to which an affiliate of Comcast Corporation (together with Comcast Corporation, “Comcast”) may, in its sole discretion, purchase from the Company licenses to certain of the Company’s software products, the Company granted Comcast a warrant to purchase shares of its common stock. (See Note 13, “Warrants” for additional information). (2) Excluded from the table above are the Notes, which are convertible under certain conditions into an aggregate of 22,304,348 shares of common stock. (See Note 9, “Convertible Notes, Other Debts and Capital Leases” for additional information on the Notes). Since the Company’s intent is to settle the principal amount of the Notes in cash, the treasury stock method is being used to calculate any potential dilutive effect of the conversion spread on diluted net income per share, if applicable. The conversion spread will have a dilutive impact on diluted net income per share when the Company’s average market price of its common stock for a given period exceeds the conversion price of $5.75 per share. |
Warrants |
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Equity [Abstract] | |
Warrants Disclosure | WARRANTS On September 26, 2016, the Company granted a warrant to purchase shares of common stock (the “Warrant”) to Comcast pursuant to which Comcast may, subject to certain vesting provisions, purchase up to 7,816,162 shares of the Company’s common stock subject to adjustment in accordance with the terms of the Warrant, for a per share exercise price of $4.76. Comcast may exercise the Warrant for cash or on a net share basis. The Warrant expires on September 26, 2023 or the prior consummation of a change of control of the Company. Comcast’s right to purchase 781,617 shares vested as of the issuance date as an incentive to enter into the software license product supply agreement. Comcast’s rights to purchase an additional 1,954,042 shares in specified tranches vest upon achievement of certain milestones that occur upon or prior to Comcast’s election for enterprise license pricing for certain of the Company’s software products. Such pricing would obligate Comcast to make certain total payments to the Company over the term of the product supply agreement. These tranches include the right to purchase 1,172,425 shares upon the acceptance and completion of field trials and 781,617 shares upon the election date, as defined in the Warrant. Comcast’s rights to purchase an additional 1,172,425 shares in specified tranches vest when Comcast exceeds specified cumulative purchase amounts from the Company under the product supply agreement. Comcast’s rights to purchase the remaining shares vest in specified tranches at the earlier of Comcast’s enterprise license pricing election (if completed by a certain date) or achievement of specified cumulative purchase amounts from the Company. The Warrant is considered an incentive for Comcast to purchase certain of the Company’s products. Therefore the value of the vested Warrant is recorded as an asset, which is recognized as a reduction in the Company’s net revenues in proportion to the pertinent sales to Comcast. The Warrant is considered indexed to the Company’s common stock and classified as stockholders’ equity based on its terms. Accordingly, the vested Warrant amounts are included in “Additional paid-in capital”. Because the Warrants contain performance criteria, which include cumulative purchase amounts Comcast must achieve for the Warrants to vest, the final measurement date for the Warrants is the date on which the Warrants vest. Prior to the final measurement, when achievement of the performance criteria has been deemed probable, the estimated fair value of Warrants is being recorded as a reduction to the Company’s net revenue based on the estimated number of Warrants expected to vest, the proportion of purchases by Comcast within the period relative to the cumulative purchase levels required for the Warrants to vest and the then-current fair value of the related Warrants. To the extent that estimate change in the future as to the number of Warrants that will vest, as well as changes in the fair market value of the Warrants, a cumulative catch-up adjustment will be recorded in the period in which the estimates change. The portion of the Warrant which vested on September 26, 2016 had a value of $1.6 million. The value of the Warrant is recorded as a reduction in the Company’s net revenues to the extent such value does not exceed net revenues from pertinent sales to Comcast. During the three and nine months ended September 28, 2018, the Company recorded $0.8 million and $1.2 million, respectively, as a reduction to net revenues in connection with amortization of the Warrant. During the three and nine months ended September 29, 2017, the Company recorded an increase to net revenues of $0.4 million and a reduction to net revenues of $38,000, respectively, in connection with amortization of the Warrant. On July 31, 2018, pursuant to the vesting provisions of the Warrant, a tranche of 1,172,425 shares subject to the Warrant vested and became exercisable upon the acceptance of completion of field trials by Comcast. The fair value of the Warrant on the date of vesting is estimated to be $2.3 million using the Black-Scholes option pricing model using the following assumptions: expected term of 5.2 years, volatility of 45%, risk-free interest rate of 2.9%, and expected dividends of 0.0%. The fair value of the Warrant was recorded as a component of “Other long term assets” with an equal offset to “Additional paid in capital” on the Company’s Condensed Consolidated Balance Sheets. The Company will amortize this asset as a reduction in the Company’s net revenues in proportion to the pertinent sales to Comcast. |
Segment Information |
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Segment Information | SEGMENT INFORMATION Operating segments are defined as components of an enterprise that engage in business activities for which separate financial information is available and evaluated by the Company’s Chief Operating Decision Maker (the “CODM”), which for Harmonic is its Chief Executive Officer, in deciding how to allocate resources and assess performance. Based on our internal reporting structure, the Company consists of two operating segments: Video and Cable Access. The operating segments were determined based on the nature of the products offered. The Video segment sells video processing and production and playout solutions and services worldwide to broadcast and media companies, streaming new media companies, cable operators, and satellite and telecommunications (telco) Pay-TV service providers. The Cable Access segment sells cable access solutions and related services to cable operators globally. The following table provides summary financial information by reportable segment (in thousands):
(1) The Company has historically employed an aggregate allocation methodology based on total revenues to attribute professional services revenue and sales expenses between its Video and Cable Access segments. Beginning in the fourth quarter of 2017, the Company prospectively changed to a more precise attribution methodology as the activities of selling and supporting the CableOS solution have become increasingly distinct from those of Video solutions. The impact of making this change in the three and nine months ended September 29, 2017 compared to the Company’s historical approach was a decrease in operating income of $2.7 million and an increase in operating loss of $5.9 million, respectively, from the Video segment and a corresponding decrease in operating loss of the Cable Access segment. The Company believes that the updated allocation methodology will provide greater clarity regarding the operating metrics of the Video and Cable Access business segments. A reconciliation of the Company’s consolidated segment operating income (loss) to consolidated loss before income taxes is as follows (in thousands):
Unallocated Corporate Expenses Together with amortization of intangibles and stock-based compensation, the Company does not allocate restructuring and related charges, TVN acquisition- and integration-related costs, and certain other non-recurring charges to the operating income (loss) for each segment because management does not include this information in the measurement of the performance of the operating segments. A measure of assets by segment is not applicable as segment assets are not included in the discrete financial information provided to the CODM. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Leases Future minimum lease payments under non-cancelable operating leases as of September 28, 2018 are as follows (in thousands):
Warranties The Company accrues for estimated warranty costs at the time of product shipment. Management periodically reviews the estimated fair value of its warranty liability and records adjustments based on the terms of warranties provided to customers, historical and anticipated warranty claims experience, and estimates of the timing and cost of warranty claims. Activity for the Company’s warranty accrual, which is included in “Accrued and other current liabilities”, is summarized below (in thousands):
Purchase Obligations The Company relies on a limited number of contract manufacturers and suppliers to provide manufacturing services for a substantial majority of its products. Obligations to purchase inventory and other commitments are generally expected to be fulfilled within one year. The Company had approximately $45.1 million of non-cancelable commitments to purchase inventories and other commitments as of September 28, 2018. Standby Letters of Credit and Guarantees As of September 28, 2018, the Company has outstanding bank guarantees and standby letters of credit in aggregate of $3.3 million, consisting primarily of $1.3 million for a building lease for the TVN French Subsidiary and $0.8 million related to contract manufacturing, with the remainder mainly related to performance bonds issued to customers. During 2017, one of the Company’s subsidiaries entered into a $2.0 million credit facility with a foreign bank for the purpose of issuing performance guarantees. The credit facility is secured by a $2.2 million guarantee issued by the Company. There were no amounts outstanding under this credit facility as of September 28, 2018. Indemnification Harmonic is obligated to indemnify its officers and the members of its Board of Directors (the “Board”) pursuant to its bylaws and contractual indemnity agreements. Harmonic also indemnifies some of its suppliers and most of its customers for specified intellectual property matters pursuant to certain contractual arrangements, subject to certain limitations. The scope of these indemnities varies, but, in some instances, includes indemnification for damages and expenses (including reasonable attorneys’ fees). There have been no amounts accrued in respect of these indemnification provisions through September 28, 2018. Legal proceedings In October 2011, Avid Technology, Inc. (“Avid”) filed a complaint in the United States District Court for the District of Delaware alleging that our MediaGrid product infringes two patents held by Avid. A jury trial on this complaint commenced on January 23, 2014 and, on February 4, 2014, the jury returned a unanimous verdict in favor of us, rejecting Avid’s infringement allegations in their entirety. In January 2015, Avid filed an appeal with respect to the jury’s verdict with the Federal Circuit. In January 2016, the Federal Circuit issued an order vacating the verdict of noninfringement and remanding the case to the trial court for a new trial on infringement. In June 2012, Avid served a subsequent complaint in the United States District Court for the District of Delaware alleging that our Spectrum product infringes one patent held by Avid. The complaint sought injunctive relief and unspecified damages. In September 2013, the U.S. Patent Trial and Appeal Board (“PTAB”) authorized an inter partes review to be instituted as to claims 1-16 of the patent asserted in this second complaint. In July 2014, the PTAB issued a decision finding claims 1-10 invalid and claims 11-16 not invalid. We filed an appeal with respect to the PTAB’s decision on claims 11-16 in September 2014, and the Federal Circuit affirmed the PTAB’s decision in April 2016. In July 2017, the court issued a scheduling order consolidating both cases and setting the trial date for November 6, 2017. On October 19, 2017, the parties agreed to settle the consolidated cases by entering into a settlement and patent portfolio cross-license agreement, and the cases were dismissed with prejudice. In connection with the agreement, the Company recorded a $6.0 million litigation settlement expense in “Selling, general and administrative expenses” in the Company’s 2017 Consolidated Statement of Operations. Of the associated $6.0 million liability, $2.5 million was paid in October 2017 and the remaining $1.5 million and $2.0 million will be paid in the second quarter of 2019 and the third quarter of 2020, respectively. From time to time, the Company is involved in lawsuits as well as subject to various legal proceedings, claims, threats of litigation, and investigations in the ordinary course of business, including claims of alleged infringement of third-party patents and other intellectual property rights, commercial, employment, and other matters. The Company assesses potential liabilities in connection with each lawsuit and threatened lawsuits and accrues an estimated loss for these loss contingencies if both of the following conditions are met: information available prior to issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of loss can be reasonably estimated. While certain matters to which the Company is a party specify the damages claimed, such claims may not represent reasonably probable losses. Given the inherent uncertainties of litigation, the ultimate outcome of these matters cannot be predicted at this time, nor can the amount of possible loss or range of loss, if any, be reasonably estimated. |
Basis of Presentation and Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||
Use of Estimates | Use of Estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The Company’s reported financial positions or results of operations may be materially different under changed conditions or when using different estimates and assumptions, particularly with respect to significant accounting policies. If estimates or assumptions differ from actual results, subsequent periods are adjusted to reflect more current information. |
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Significant Accounting Policies | The Company’s significant accounting policies are described in Note 2 to its audited Consolidated Financial Statements included in the 2017 Form 10-K. There have been no significant changes to these policies during the nine months ended September 28, 2018 other than those disclosed in Note 2, “Recently Adopted Accounting Pronouncements”. |
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Recent Accounting Pronouncements | Other Recently Adopted Accounting Pronouncements In January 2016, the Financial Accounting Standards Board (“FASB) issued Accounting Standards Updated (“ASU”) No. 2016-01, Financial Instruments (Topic 825): Recognition and Measurement of Financial Assets and Financial Liabilities, which requires equity investments to be measured at fair value with changes in fair value recognized in net income and simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. The Company adopted this new standard in the first quarter of fiscal 2018, and the adoption did not have a material impact on its condensed consolidated financial statements. See Note 3, “Investments in Equity Securities” for additional information. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires entities to present the aggregate changes in cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, the statement of cash flows will be required to present restricted cash and restricted cash equivalents as a part of the beginning and ending balances of cash and cash equivalents. The Company adopted this new standard in the first quarter of fiscal 2018 on a retrospective basis. The Company’s total restricted cash balance was $0.2 million and $1.7 million as of September 28, 2018 and December 31, 2017, respectively. The Company’s total restricted cash balance was $2.0 million and $1.8 million as of September 29, 2017 and December 31, 2016, respectively. These restricted cash balances are presented as a part of the ending and beginning balances of cash, cash equivalents and restricted cash on the Company’s Condensed Consolidated Statements of Cash Flows for the corresponding periods. See Note 6, “Balance Sheet Components” for additional information. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The objective of ASU 2017-01 is to clarify the definition of a business in order to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill and consolidation. The Company adopted this new standard in the first quarter of fiscal 2018, and the adoption had no impact on its condensed consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that Is a Service Contract. This new standard requires an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. Costs for implementation activities in the application development stage can be capitalized depending on the nature of the costs, while costs incurred during the preliminary project and post-implementation stages are expensed as the activities are performed. The costs capitalized are expensed over the term of the hosting arrangement. The amendments in the new ASU also require the entity to present the expense related to the capitalized implementation costs in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement and classify payments for capitalized implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting element. This new standard is effective for the Company for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years and should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Early adoption is permitted, including adoption in any interim period. The Company early adopted this new standard in the third quarter of fiscal 2018 and applied it prospectively to all implementation costs incurred after the date of adoption. The adoption of this standard did not have a significant impact on the Company’s condensed consolidated financial statements as of, and for the three and nine months ended September 28, 2018. Recently Issued Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), to amend the existing accounting standard for lease accounting. This new standard will require lessees to recognize most leases on their balance sheets as a right-of-use asset with a corresponding lease liability, and lessors to recognize a net lease investment. Additional qualitative and quantitative disclosures will also be required. The new ASU will be effective for the Company beginning in the first quarter of fiscal 2019 and early adoption is permitted. The new standard requires a modified retrospective transition and allows a cumulative-effect adjustment to the opening balance of retained earnings during the period of adoption. The Company is in the process of analyzing the impact of this standard, including its current accounting policies and practices to identify potential impacts that would result from the application of this standard. The Company’s adoption process of the new standard is ongoing, including evaluating and quantifying the impact on its consolidated financial statements, identifying the population of leases (and embedded leases), and collecting and validating lease data. The Company expects that majority of its lease obligations designated as operating leases will be reported on its Consolidated Balance Sheets upon adoption. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets and certain other instruments. For trade receivables and other instruments, the Company will be required to use a new forward-looking “expected loss” model. Additionally, credit losses on available-for-sale debt securities should be recorded through an allowance for credit losses limited to the amount by which fair value is below amortized cost. The new ASU will be effective for the Company beginning in the first quarter of fiscal 2020 and early adoption is permitted. The adoption of the new ASU is not expected to have a material impact on the Company’s consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The new ASU removes Step 2 of the goodwill impairment test and requires the assessment of fair value of individual assets and liabilities of a reporting unit to measure goodwill impairments. Goodwill impairment will then be the amount by which a reporting unit's carrying value exceeds its fair value. The new ASU will be effective for the Company beginning in the first quarter of fiscal 2020 on a prospective basis, and early adoption is permitted. The Company is currently evaluating the impact of adopting the new ASU on its consolidated financial statements. In June 2018, the FASB issued ASU No. 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. The new ASU expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost. The new ASU will be effective for the Company beginning in the first quarter of fiscal 2019 and early adoption is permitted. The Company is currently evaluating the impact of adopting this new standard on its consolidated financial statements. In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. This final rule is effective on November 5, 2018. The release expanded the disclosure requirements on the analysis of stockholders' equity for interim financial statements. Under the release, an analysis of changes in each caption of stockholders' equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. According to the release, the staff of the SEC will not object if a filer’s first presentation of changes in shareholders’ equity is included in its Quarterly Report on Form 10-Q for the quarter that begins after the final rule’s effective date. The Company plans to first include the changes required by this release in its Quarterly Report on Form 10-Q for the first quarter of fiscal 2019. |
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Revenue Recognition, Policy | Revenue Recognition The Company’s principal sources of revenue are from the sale of hardware, software, hardware and software maintenance contracts, and end-to-end solutions, encompassing design, manufacture, test, integration and installation of products. The Company also derives recurring revenue from subscriptions, which are comprised of subscription fees from customers utilizing the Company’s cloud-based media processing solutions. Revenue from contracts with customers is recognized using the following five steps: a) Identify the contract(s) with a customer; b) Identify the performance obligations in the contract; c) Determine the transaction price; d) Allocate the transaction price to the performance obligations in the contract; and e) Recognize revenue when (or as) the Company satisfies a performance obligation. A contract contains a promise (or promises) to transfer goods or services to a customer. A performance obligation is a promise (or a group of promises) that is distinct. The transaction price is the amount of consideration a Company expects to be entitled from a customer in exchange for providing the goods or services. The unit of account for revenue recognition is a performance obligation. A contract may contain one or more performance obligations, including hardware, software, professional services and support and maintenance. Performance obligations are accounted for separately if they are distinct. A good or service is distinct if the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and the good or service is distinct in the context of the contract. Otherwise performance obligations will be combined with other promised goods or services until the Company identifies a bundle of goods or services that is distinct. The transaction price is allocated to all the separate performance obligations in an arrangement. It reflects the amount of consideration to which the Company expects to be entitled in exchange for transferring goods or services, which may include an estimate of variable consideration to the extent that it is probable of not being subject to significant reversals in the future based on the Company’s experience with similar arrangements. The transaction price also reflects the impact of the time value of money if there is a significant financing component present in an arrangement. The transaction price excludes amounts collected on behalf of third parties, such as sales taxes. Revenue is recognized when the Company satisfies each performance obligation by transferring control of the promised goods or services to the customer. Goods or services can transfer at a point in time or over time depending on the nature of the arrangement. Deferred revenue represents the Company’s obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. Our payment terms vary by the type and location of our customer and the products or services offered. The term between invoicing and when payment is due is not significant. For certain products or services and customer types, we require payment before the products or services are delivered to the customer. Revenue recognized during the three and nine months ended September 28, 2018 that was included within the deferred revenue balance at January 1, 2018 was $7.8 million and $43.2 million, respectively. Contract assets exist when the Company has satisfied a performance obligation but does not have an unconditional right to consideration (e.g., because the entity first must satisfy another performance obligation in the contract before it is entitled to invoice the customer). Contract assets are reported as a component of “Prepaid expenses and other current assets” on the Condensed Consolidated Balance Sheets. See Note 6, “Balance Sheet Components’ for additional information. Shipping and handling costs are accounted for as a fulfillment cost and are recorded in cost of revenue in the Company’s Condensed Consolidated Statements of Operations. Hardware and Software. Revenue from the sale of hardware and software products is recognized when the control is transferred. For most of the Company’s product sales (including sales to distributors and system integrators), the control is transferred at the time the product is shipped or delivery has occurred because the customer has significant risks and rewards of ownership of the asset and the Company has a present right to payment at that time. The Company’s agreements with the distributors and system integrators have terms which are generally consistent with the standard terms and conditions for the sale of the Company’s equipment to end users, and do not provide for product rotation or pricing allowances, as are typically found in agreements with stocking distributors. The Company offers trade-in rights which are specifically identified and accrued for at the end of the period through contra-revenue. |
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Revenue Recognition, Multiple-deliverable Arrangements | Arrangements with Multiple Performance Obligations. The Company has revenue arrangements that include multiple performance obligations. The Company allocates transaction price to all separate performance obligations based on their relative standalone selling prices (“SSP”). The Company’s best evidence for SSP is the price the Company charges for that good or service when the Company sells it separately in similar circumstances to similar customers. If goods or services are not always sold separately, the Company uses the best estimate of SSP in the allocation of transaction price. The objective of determining the best estimate of SSP is to estimate the price at which the Company would transact a sale if the product or service were sold on a standalone basis. The Company’s process for determining best estimate of SSP involves management’s judgment, and considers multiple factors including, but not limited to, major product groupings, geographies, gross margin objectives and pricing practices. Pricing practices taken into consideration include contractually stated prices, discounts offered and applicable price lists. These factors may vary over time, depending upon the unique facts and circumstances related to each deliverable. If the facts and circumstances underlying the factors considered change or should future facts and circumstances lead the Company to consider additional factors, the Company’s best estimate of SSP may also change. Solution Sales. Solution sales for the design, manufacture, test, integration and installation of products, including equipment acquired from third parties to be integrated with Harmonic’s products, that are customized to meet the customer’s specifications are accounted for based on the percentage-of-completion basis, using the input method. Some of our arrangements may include acceptance provisions that require testing of the solution against specific performance criteria. The Company performs a detailed evaluation to determine whether the arrangement involves performance criteria based on our standard performance criteria. The Company has a long-standing history of entering into contractual arrangements to deliver the solution sales based on standard performance criteria. For this type of arrangement, we consider the customer acceptance clause not substantive and recognize product revenue when the customer takes possession on the product and recognize service on a percentage-of-completion basis using the input method. However, if the solution results in significant production, modification or customization, we consider the arrangement as a single performance obligation and recognize the revenue at a point in time, depending on the complexity of the solution and nature of acceptance. Professional services. Revenue from professional services is recognized over time, on the percentage-of-completion basis using the input method. Input method. The use of the input method requires the Company to make reasonably dependable estimates. We use the input method based on labor hours, where revenue is calculated based on the percentage of total hours incurred in relation to total estimated hours at completion of the contract. The input method is reasonable because the hours best reflect the Company’s efforts toward satisfying the performance obligation over time. As circumstances change over time, the Company updates its measure of progress to reflect any changes in the outcome of the performance obligation. Such changes to an entity’s measure of progress are accounted for as a change in accounting estimates. Support and maintenance. Support and maintenance services are satisfied ratably over time as the customer simultaneously receives and consumes the benefits of the services. Contract costs. The incremental costs of obtaining a contract are capitalized if the costs are expected to be recovered. Costs that are recognized as assets are amortized straight-line over the period as the related goods or services transfer to the customer. Costs incurred to fulfill a contract are capitalized if they are not covered by other relevant guidance, relate directly to a contract, will be used to satisfy future performance obligations, and are expected to be recovered. |
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Derivatives and Hedging Activities | The Company uses forward contracts to manage exposures to foreign currency exchange rates. The Company’s primary objective in holding derivative instruments is to reduce the volatility of earnings and cash flows associated with fluctuations in foreign currency exchange rates and the Company does not use derivative instruments for trading purposes. The use of derivative instruments exposes the Company to credit risk to the extent that the counterparties may be unable to meet their contractual obligations. As such, the potential risk of loss with any one counterparty is closely monitored by the Company. Derivatives Not Designated as Hedging Instruments (Balance Sheet Hedges) The Company’s balance sheet hedges consist of foreign currency forward contracts that generally mature within three months, are carried at fair value, and are used to minimize the short-term impact of foreign currency exchange rate fluctuation on cash and certain trade and inter-company receivables and payables. Changes in the fair value of these foreign currency forward contracts are recognized in “Other expense, net” in the Condensed Consolidated Statement of Operations and are largely offset by the changes in the fair value of the assets or liabilities being hedged. Offsetting of Derivative Assets and Liabilities The Company recognizes all derivative instruments on a gross basis in the Condensed Consolidated Balance Sheets. However, the arrangements with its counterparties allows for net settlement, which are designed to reduce credit risk by permitting net settlement with the same counterparty. |
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Fair Value of Financial Instruments | The Company uses the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The fair value of the Company’s convertible notes is influenced by interest rates, the Company’s stock price and stock market volatility. The authoritative accounting guidance establishes a framework for measuring fair value and requires disclosure about the fair value measurements of assets and liabilities. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants on the measurement date. This guidance requires the Company to classify and disclose assets and liabilities measured at fair value on a recurring basis, as well as fair value measurements of assets and liabilities measured on a nonrecurring basis in periods subsequent to initial measurement, in a three-tier fair value hierarchy as described below. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The guidance describes three levels of inputs that may be used to measure fair value:
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Goodwill and Intangible Assets, Goodwill | Goodwill represents the difference between the purchase price and the estimated fair value of the identifiable assets acquired and liabilities assumed. Goodwill is allocated among and evaluated for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment. The Company has two reporting units, Video and Cable Access. The Company tests for goodwill impairment at the reporting unit level on an annual basis in the fiscal fourth quarter, or more frequently, if events or changes in circumstances indicate that the asset is more likely than not impaired. The Company performed its annual goodwill impairment review at the reporting unit level as of October 31, 2017, with no goodwill impairment indicated. There were no events or circumstances which triggered additional impairment reviews for the periods presented. |
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Restructuring and Related Charges | The fair value of this liability is based on a net present value model using a credit-adjusted, risk-free rate. The liability will be paid out over the remainder of the leased properties’ term, which continues through August 2020. |
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Share-based Compensation Expense | The Company estimates the fair value of employee stock options and stock purchase rights under the ESPP using a Black-Scholes option valuation model. The value of the stock purchase rights under the ESPP consists of: (1) the 15% discount on the purchase of the stock; (2) 85% of the fair value of the call option; and (3) 15% of the fair value of the put option. The call option and put option were valued using the Black-Scholes option pricing model. The expected term of the employee stock options represents the weighted-average period that the stock options are expected to remain outstanding. The computation of the expected term was determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior. The expected term of the stock purchase rights under the ESPP represents the period of time from the beginning of the offering period to the purchase date. The Company uses its historical volatility for a period equivalent to the expected term of the options to estimate the expected volatility. The risk-free interest rate assumption is based on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term. The Company has not paid and does not plan to pay any cash dividends in the foreseeable future. |
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Segment Information | Operating segments are defined as components of an enterprise that engage in business activities for which separate financial information is available and evaluated by the Company’s Chief Operating Decision Maker (the “CODM”), which for Harmonic is its Chief Executive Officer, in deciding how to allocate resources and assess performance. Based on our internal reporting structure, the Company consists of two operating segments: Video and Cable Access. The operating segments were determined based on the nature of the products offered. The Video segment sells video processing and production and playout solutions and services worldwide to broadcast and media companies, streaming new media companies, cable operators, and satellite and telecommunications (telco) Pay-TV service providers. The Cable Access segment sells cable access solutions and related services to cable operators globally. |
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Warranties and Indemnification | The Company accrues for estimated warranty costs at the time of product shipment. Management periodically reviews the estimated fair value of its warranty liability and records adjustments based on the terms of warranties provided to customers, historical and anticipated warranty claims experience, and estimates of the timing and cost of warranty claims. Harmonic is obligated to indemnify its officers and the members of its Board of Directors (the “Board”) pursuant to its bylaws and contractual indemnity agreements. Harmonic also indemnifies some of its suppliers and most of its customers for specified intellectual property matters pursuant to certain contractual arrangements, subject to certain limitations. The scope of these indemnities varies, but, in some instances, includes indemnification for damages and expenses (including reasonable attorneys’ fees). |
Recent Accounting Pronouncements - Revenue From Contracts With Customer (Tables) |
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Accounting Changes and Error Corrections [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The cumulative effect of initially applying Topic 606 to the Company’s condensed consolidated balance sheet on January 1, 2018 was as follows (in thousands):
The impact from adopting Topic 606 on the Company’s condensed consolidated financial statements was as follows (in thousands):
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Derivative and Hedging Activities (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments gain and losses by Statement of Operations locations | Gains (losses) on the non-designated derivative instruments recognized during the periods presented were as follows (in thousands):
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Schedule of Notional Amounts of Outstanding Derivative Positions | The U.S. dollar equivalents of all outstanding notional amounts of foreign currency forward contracts, including the Euro, British pound, Israeli shekel and Japanese yen, are summarized as follows (in thousands):
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Schedule of Derivatives Instruments Balance Sheet Location | The locations and fair value amounts of the Company’s derivative instruments reported in its Condensed Consolidated Balance Sheets are as follows (in thousands):
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Changes in fair values of non-designated foreign currency forward contracts | As of September 28, 2018, information related to the offsetting arrangements was as follows (in thousands):
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Assets and Liabilities Measured at Fair Value Based on Three-Tier Fair Value Hierarchy | The following table sets forth the fair value of the Company’s financial assets and liabilities measured at fair value on a recurring basis based on the three-tier fair value hierarchy (in thousands):
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Balance Sheet Components (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable, Net | The following tables provide details of selected balance sheet components (in thousands):
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Inventories |
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Prepaid, and Other Current Assets |
(1) The Company’s TVN subsidiary in France (the “TVN French Subsidiary”) participates in the French Crédit d’Impôt Recherche program (the “R&D tax credits”) which allows companies to monetize eligible research expenses. The R&D tax credits can be used to offset against income tax payable to the French government in each of the four years after being incurred, or if not utilized, are recoverable in cash. The amount of R&D tax credits recoverable are subject to audit by the French government. The R&D tax credits receivable at September 28, 2018 were approximately $25.6 million and are expected to be recoverable from 2019 through 2022 with $7.5 million reported as a component of “Prepaid expenses and other current assets” and $18.1 million reported as a component of “Other long-term assets” on the Company’s Condensed Consolidated Balance Sheets. (2) Contract assets reflect the satisfied performance obligations for which the Company does not yet have an unconditional right to consideration. (3) Amounts represent cash collateral security for certain bank guarantees. These restricted funds are invested in bank deposits and cannot be withdrawn from the Company’s accounts without the prior written consent of the applicable secured party. |
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Property, Plant and Equipment |
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Other Long Term Assets |
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Accrued Liabilities |
(1) See Note 8, “Restructuring and related charges-TVN VDP,” for additional information on the Company’s TVN VDP liabilities. |
Goodwill and Identified Intangible Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill by reportable segments for the nine months ended September 28, 2018 were as follows (in thousands):
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Summary of Goodwill and Identified Intangible Assets | The following is a summary of intangible assets, net (in thousands):
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Amortization Expense for Identifiable Purchased Intangible Assets | Amortization expense for the identifiable purchased intangible assets for the three and nine months ended September 28, 2018 and September 29, 2017 was allocated as follows (in thousands):
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Estimated Future Amortization Expense of Purchased Intangible Assets | The estimated future amortization expense of purchased intangible assets with definite lives is as follows (in thousands):
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Restructuring and Related Charges (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Reserve by Type of Cost | The following table summarizes the activities related to the Company’s restructuring plans during the nine months ended September 28, 2018 (in thousands):
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Summary of restructuring activities | The following table summarizes the restructuring and related charges (in thousands):
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Convertible Notes, Other Debts And Capital Leases (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Carrying Values and Estimated Fair Values of Debt Instruments | The following table presents the components of the Notes as of September 28, 2018 and December 31, 2017 (in thousands, except for years and percentages):
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Convertible Debt Interest | The following table presents interest expense recognized for the Notes (in thousands):
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Schedule of Other Debt and Capital Leases | The Company has a variety of debt and credit facilities in France to satisfy the financing requirements of TVN operations. These arrangements are summarized in the table below (in thousands):
(1) As of September 28, 2018 and December 31, 2017, loans backed by French R&D tax credit receivables were $17.0 million and $17.7 million, respectively. As of September 28, 2018, the TVN French Subsidiary had an aggregate of $25.6 million of R&D tax credit receivables from the French government from 2018 through 2022. See Note 6, “Balance Sheet Components” for additional information. These tax loans have a fixed rate of 0.6%, plus EURIBOR 1 month + 1.3% and mature between 2019 through 2021. The remaining loans of $2.4 million at September 28, 2018, primarily relate to financial support from French government agencies for R&D innovation projects at minimal interest rates, and these loans mature between 2019 through 2025. |
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Schedule of Maturities of Long-term Debt | The table below presents the future minimum repayments of debts and capital lease obligations for TVN as of September 28, 2018 (in thousands):
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Employee Benefit Plans and Stock-based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Stock Options Outstanding | The following table summarizes the Company’s stock option activities and related information during the nine months ended September 28, 2018 (in thousands, except per share amounts and terms):
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Summary of Restricted Stock Units Outstanding | The following table summarizes the Company’s RSUs activities and related information during the nine months ended September 28, 2018 (in thousands, except per share amounts and terms):
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Schedule of Defined Benefit Plans Obligations | The table below presents the components of net periodic benefit costs (in thousands):
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Summary of Stock-Based Compensation Expense | Stock-based Compensation The following table summarizes stock-based compensation for all plans (in thousands):
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Valuation Assumptions for Stock Options | At the date of grant, the Company estimated the fair value of each stock option grant and stock purchase right granted under the ESPP using the following weighted average assumptions:
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Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions |
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Income Taxes (Tables) |
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Sep. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of income before income tax | The Company reported the following operating results for the periods presented (in thousands):
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Net Loss Per Share (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 28, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Numerators and Denominators of Basic and Diluted Net Income (Loss) Per Share Computations | The following table sets forth the computation of the basic and diluted net loss per share (in thousands, except per share amounts):
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Anti-dilutive Securities | The following table sets forth the potential weighted common shares outstanding that were excluded from the computation of basic and diluted net loss per share calculations (in thousands):
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Segment Information (Tables) |
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Sep. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Information, by Segment | The following table provides summary financial information by reportable segment (in thousands):
(1) The Company has historically employed an aggregate allocation methodology based on total revenues to attribute professional services revenue and sales expenses between its Video and Cable Access segments. Beginning in the fourth quarter of 2017, the Company prospectively changed to a more precise attribution methodology as the activities of selling and supporting the CableOS solution have become increasingly distinct from those of Video solutions. The impact of making this change in the three and nine months ended September 29, 2017 compared to the Company’s historical approach was a decrease in operating income of $2.7 million and an increase in operating loss of $5.9 million, respectively, from the Video segment and a corresponding decrease in operating loss of the Cable Access segment. The Company believes that the updated allocation methodology will provide greater clarity regarding the operating metrics of the Video and Cable Access business segments. A reconciliation of the Company’s consolidated segment operating income (loss) to consolidated loss before income taxes is as follows (in thousands):
|
Commitments and Contingencies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Future Minimum Lease Payments Under Non-cancelable Operating Leases | Future minimum lease payments under non-cancelable operating leases as of September 28, 2018 are as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Warranty Accrual Included in Accrued Liabilities | Activity for the Company’s warranty accrual, which is included in “Accrued and other current liabilities”, is summarized below (in thousands):
|
Investments in Equity Securities (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 28, 2018 |
Sep. 28, 2018 |
Oct. 22, 2014 |
Sep. 02, 2014 |
|
Vislink plc [Member] | ||||
Schedule of Cost-method Investments [Line Items] (Deprecated 2018-01-31) | ||||
Noncontrolling Interest, Ownership Percentage by Parent | 3.30% | |||
Cost Method Investments Original Cost | $ 3.3 | |||
Pebble Beach Systems [Member] | ||||
Schedule of Cost-method Investments [Line Items] (Deprecated 2018-01-31) | ||||
Proceeds from Sale of Available-for-sale Securities, Equity | $ 0.1 | |||
Cost-method Investments, Realized Gain (Loss) | $ (0.1) | $ 0.1 | ||
Variable Interest Entity, Not Primary Beneficiary [Member] | EDC [Member] | ||||
Schedule of Cost-method Investments [Line Items] (Deprecated 2018-01-31) | ||||
Noncontrolling Interest, Ownership Percentage by Parent | 18.40% | |||
Cost Method Investments Original Cost | $ 3.5 | |||
Cost-method Investments, Other than Temporary Impairment | $ 0.0 |
Derivatives and Hedging Activities - Additional Information (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 28, 2018
USD ($)
| |
Not Designated as Hedging Instrument [Member] | Forward Contracts [Member] | |
Derivative [Line Items] | |
Derivative, Term of Contract | 3 months |
Israel [Member] | |
Derivative [Line Items] | |
Compensating Balance, Amount | $ 1.0 |
Derivative and Hedging Activities gain losses in Statement of Operations (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 28, 2018 |
Sep. 29, 2017 |
Sep. 28, 2018 |
Sep. 29, 2017 |
|
Other Nonoperating Income (Expense) [Member] | Not Designated as Hedging Instrument [Member] | ||||
Derivatives, Fair Value [Line Items] | ||||
Gains (losses) recognized in income | $ (30) | $ 119 | $ (1,412) | $ (66) |
Derivatives and Hedging Activities Notional Amounts (Details) - Foreign Exchange Forward [Member] - Not Designated as Hedging Instrument [Member] - Fair Value Hedging [Member] - USD ($) $ in Thousands |
Sep. 28, 2018 |
Dec. 31, 2017 |
---|---|---|
Long [Member] | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Purchase - Derivative Assets | $ 28,782 | $ 12,875 |
Short [Member] | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Sell - Derivative Liability | $ 0 | $ 1,509 |
Derivatives and Hedging Activities Assets Liabilities Balance Sheet Location (Details) - Foreign Exchange Contract [Member] - USD ($) $ in Thousands |
Sep. 28, 2018 |
Dec. 31, 2017 |
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Derivative Asset, Current | $ 5 | $ 33 |
Derivative Liability, Current | 195 | 4 |
Not Designated as Hedging Instrument [Member] | Prepaid Expenses and Other Current Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Asset, Current | 5 | 33 |
Not Designated as Hedging Instrument [Member] | Accrued Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liability, Current | $ 195 | $ 4 |
Balance Sheet Components - Accounts Receivable, Net (Details) - USD ($) $ in Thousands |
Sep. 28, 2018 |
Dec. 31, 2017 |
---|---|---|
Receivables [Abstract] | ||
Accounts receivable | $ 81,059 | $ 74,475 |
Less: allowances for doubtful accounts and sales returns | (3,073) | (4,631) |
Accounts Receivable, Net, Current | $ 77,986 | $ 69,844 |
Balance Sheet Components - Inventories (Details) - USD ($) $ in Thousands |
Sep. 28, 2018 |
Dec. 31, 2017 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 1,374 | $ 2,881 |
Work-in-process | 847 | 933 |
Finished goods | 9,966 | 10,130 |
Service-related spares | 11,146 | 12,032 |
Inventory, Net | $ 23,333 | $ 25,976 |
Balance Sheet Components - Prepaid Expenses And Other Current Assets (Details) - USD ($) $ in Thousands |
Sep. 28, 2018 |
Dec. 31, 2017 |
Sep. 29, 2017 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||||||||||
French R&D tax credits receivable(1) | [1] | $ 7,453 | $ 6,609 | |||||||||
Deferred cost of revenue | 4,700 | 4,440 | ||||||||||
Contract assets(2) | [2] | 3,656 | 0 | |||||||||
Prepaid maintenance, royalty, rent, property taxes and value added tax | 3,609 | 3,867 | ||||||||||
Capitalized commission | 1,259 | |||||||||||
Restricted cash(3) | 222 | [3] | 530 | [3] | $ 803 | |||||||
Other | 3,327 | 3,485 | ||||||||||
Prepaid Expense and Other Assets, Current | $ 24,226 | $ 18,931 | ||||||||||
|
Balance Sheet Components - Property and Equipment, Net (Details) - USD ($) $ in Thousands |
Sep. 28, 2018 |
Dec. 31, 2017 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 145,550 | $ 143,845 |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | (121,399) | (114,580) |
Property, Plant and Equipment, Net | 24,151 | 29,265 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 88,167 | 87,121 |
Capitalized Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 35,887 | 35,139 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 14,990 | 15,051 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 6,506 | $ 6,534 |
Balance Sheet Components - Other Long Term Assets (Details) - USD ($) $ in Thousands |
Sep. 28, 2018 |
Dec. 31, 2017 |
||
---|---|---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||
R&D tax credits receivable | $ 18,104 | $ 22,322 | ||
Deferred tax assets | 9,362 | 10,462 | ||
Equity investment | 3,593 | 3,593 | ||
Others(1) | [1] | 7,565 | 6,536 | |
Other Assets, Noncurrent | $ 38,624 | $ 42,913 | ||
|
Balance Sheet Components - Accrued and Other Current Liabilities (Details) - USD ($) $ in Thousands |
Sep. 28, 2018 |
Dec. 31, 2017 |
||
---|---|---|---|---|
Payables and Accruals [Abstract] | ||||
Accrued employee compensation and related expenses | $ 17,405 | $ 16,414 | ||
Accrued warranty | 4,749 | 4,381 | ||
Customer deposits | 3,638 | 5,020 | ||
Contingent inventory reserves | 3,291 | 3,806 | ||
Accrued TVN VDP, current (1) | [1] | 2,100 | 3,186 | |
Accrued royalty payments | 2,077 | 2,195 | ||
Accrued Avid litigation settlement, current | 1,500 | |||
Others | 15,974 | 13,703 | ||
Accrued Liabilities, Current | $ 50,734 | $ 48,705 | ||
|
Balance Sheet Components Additional Information (Details) - USD ($) $ in Thousands |
Sep. 28, 2018 |
Dec. 31, 2017 |
Sep. 29, 2017 |
||
---|---|---|---|---|---|
Restricted Cash for bank guarantee | $ 0 | $ 1,203 | $ 1,178 | ||
R&D tax credits receivable | 18,104 | 22,322 | |||
French R&D tax credits receivable(1) | [1] | 7,453 | $ 6,609 | ||
TVN [Member] | Research Tax Credit Carryforward [Member] | |||||
R&D tax credits receivable | 25,600 | ||||
Prepaid Expenses and Other Current Assets [Member] | TVN [Member] | Research Tax Credit Carryforward [Member] | |||||
French R&D tax credits receivable(1) | 7,500 | ||||
Other Noncurrent Assets [Member] | TVN [Member] | Research Tax Credit Carryforward [Member] | |||||
French R&D tax credits receivable(1) | $ 18,100 | ||||
|
Goodwill and Intangible Assets - Narratives (Details) |
9 Months Ended | |
---|---|---|
Oct. 31, 2017
USD ($)
|
Sep. 28, 2018
ReportingUnit
|
|
Goodwill [Line Items] | ||
Number of Reporting Units | ReportingUnit | 2 | |
Goodwill, Impairment Loss | $ | $ 0 |
Goodwill and Identified Intangible Assets - Changes in Carrying Amount of Goodwill (Detail) $ in Thousands |
9 Months Ended |
---|---|
Sep. 28, 2018
USD ($)
| |
Goodwill [Line Items] | |
Balance at beginning of period | $ 242,827 |
Foreign currency translation adjustment | (1,315) |
Balance at end of period | 241,512 |
Video [Member] | |
Goodwill [Line Items] | |
Balance at beginning of period | 182,012 |
Foreign currency translation adjustment | (1,297) |
Balance at end of period | 180,715 |
Cable Access [Member] | |
Goodwill [Line Items] | |
Balance at beginning of period | 60,815 |
Foreign currency translation adjustment | (18) |
Balance at end of period | $ 60,797 |
Goodwill and Identified Intangible Assets - Amortization Expense for Identifiable Purchased Intangible Assets (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 28, 2018 |
Sep. 29, 2017 |
Sep. 28, 2018 |
Sep. 29, 2017 |
|
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Included in cost of revenue | $ 1,295 | $ 1,295 | $ 3,885 | $ 3,885 |
Included in operating expenses | 792 | 793 | 2,396 | 2,347 |
Total amortization expense | $ 2,087 | $ 2,088 | $ 6,281 | $ 6,232 |
Goodwill and Identified Intangible Assets - Estimated Future Amortization Expense of Purchased Intangible Assets (Detail) - USD ($) $ in Thousands |
Sep. 28, 2018 |
Dec. 31, 2017 |
---|---|---|
Acquired Finite-Lived Intangible Assets [Line Items] | ||
2018 (remaining three months) | $ 2,089 | |
2019 | 8,354 | |
2020 | 3,993 | |
2021 | 502 | |
Total future amortization expense | 14,938 | $ 21,279 |
Cost of Revenue [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
2018 (remaining three months) | 1,295 | |
2019 | 5,180 | |
2020 | 951 | |
2021 | 0 | |
Total future amortization expense | 7,426 | |
Operating Expense [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
2018 (remaining three months) | 794 | |
2019 | 3,174 | |
2020 | 3,042 | |
2021 | 502 | |
Total future amortization expense | $ 7,512 |
Restructuring and Related Charges Restructuring and Related Charges, COS & OPEX (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 28, 2018 |
Sep. 29, 2017 |
Sep. 28, 2018 |
Sep. 29, 2017 |
|
Restructuring and Related Activities [Abstract] | ||||
Cost of revenue - restructuring and related charges | $ 7 | $ 549 | $ 884 | $ 1,335 |
Operating expenses - Restructuring and related charges | 987 | 2,028 | 2,704 | 4,084 |
Restructuring Charges | $ 994 | $ 2,577 | $ 3,588 | $ 5,419 |
Convertible Notes, Other Debts And Capital Leases - Convertible Note Roll Forward (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended | |
---|---|---|---|
Sep. 28, 2018 |
Dec. 31, 2017 |
Dec. 31, 2015 |
|
Debt Instrument [Line Items] | |||
Principal amount | $ 128,250 | $ 128,250 | $ 128,250 |
Less: Debt discount, net of amortization | (13,404) | (17,404) | |
Less: Debt issuance costs, net of amortization | (1,616) | (2,098) | |
Carrying amount | $ 113,230 | $ 108,748 | |
Remaining amortization period (years) | 2 years 2 months 12 days | 2 years 10 months 28 days | |
Effective interest rate on liability component | 9.94% | 9.94% | |
Carrying amount of equity component | $ 26,062 | $ 26,062 |
Convertible Notes, Other Debts And Capital Leases - Interest (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 28, 2018 |
Sep. 29, 2017 |
Sep. 28, 2018 |
Sep. 29, 2017 |
|
Debt Disclosure [Abstract] | ||||
Contractual interest expense | $ 1,283 | $ 1,283 | $ 3,848 | $ 3,848 |
Amortization of debt discount | 1,364 | 1,235 | 4,001 | 3,623 |
Amortization of debt issuance costs | 164 | 149 | 481 | 437 |
Total interest expense recognized | $ 2,811 | $ 2,667 | $ 8,330 | $ 7,908 |
Convertible Notes , Other Debts And Capital Leases - Other Debt and Capital Lease Obligations (Details) - USD ($) $ in Thousands |
Sep. 28, 2018 |
Dec. 31, 2017 |
||
---|---|---|---|---|
Debt Instrument [Line Items] | ||||
Financing from French government agencies related to various government incentive programs (1) | [1] | $ 19,443 | $ 20,565 | |
Term loans | 1,018 | 1,282 | ||
Obligations under capital leases | 371 | 1,099 | ||
Total debt obligations | 20,832 | 22,946 | ||
Less: current portion | (7,677) | (7,610) | ||
Long-term portion | $ 13,155 | $ 15,336 | ||
|
Convertible Notes, Other Debts And Capital Leases - Debt Maturities (Details) $ in Thousands |
Sep. 28, 2018
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
Capital Leases, Future Minimum Payments, Remainder of Fiscal Year | $ 205 |
Long-term Debt, Maturities, Repayments of Principal, Remainder of Fiscal Year | 659 |
Capital Leases, Future Minimum Payments Due in Two Years | 93 |
Long-term Debt, Maturities, Repayments of Principal in Year Two | 6,934 |
Capital Leases, Future Minimum Payments Due in Three Years | 50 |
Long-term Debt, Maturities, Repayments of Principal in Year Three | 6,741 |
Capital Leases, Future Minimum Payments Due in Four Years | 23 |
Long-term Debt, Maturities, Repayments of Principal in Year Four | 5,441 |
Capital Leases, Future Minimum Payments Due in Five Years | 0 |
Long-term Debt, Maturities, Repayments of Principal in Year Five | 461 |
Capital Leases, Future Minimum Payments Due Thereafter | 0 |
Long-term Debt, Maturities, Repayments of Principal after Year Five | 225 |
Capital Leases, Future Minimum Payments Due | 371 |
Long-term Debt | $ 20,461 |
Employee Benefit Plans and Stock-based Compensation - Additional Information (Detail) - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|---|
Sep. 28, 2018 |
Jun. 29, 2018 |
Sep. 29, 2017 |
Sep. 28, 2018 |
Sep. 29, 2017 |
Dec. 31, 2017 |
Jan. 01, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Employee Service Share-based Compensation, Tax Benefit from Exercise of Stock Options | $ 0 | $ 0 | $ 0 | $ 0 | |||
Total stock-based compensation | 5,433,000 | $ 3,720,000 | 14,202,000 | 11,107,000 | |||
Defined Benefit Plan, Benefit Obligation | 5,100,000 | 5,100,000 | $ 5,000,000 | ||||
Liability, Defined Benefit Pension Plan, Current | 100,000 | 100,000 | |||||
Liability, Defined Benefit Pension Plan, Noncurrent | 5,000,000 | $ 5,000,000 | |||||
Discretionary contributions of plan | 25.00% | ||||||
Percent of employees' gross pay eligible for matching | 4.00% | ||||||
Maximum contribution amount per participant | $ 1,000 | ||||||
Contributions in period | 259,000 | $ 326,000 | |||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $ 10,900,000 | $ 10,900,000 | |||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 1 year 7 months 6 days | ||||||
Dividends, Share-based Compensation, Cash | $ 0 | ||||||
Stock Option | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Common Stock, Capital Shares Reserved for Future Issuance | 4,500,000 | 4,500,000 | |||||
Performance-based Restricted Stock Units [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 1,443,168 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | 1,343,168 | ||||||
Total stock-based compensation | $ 2,600,000 | $ 6,000,000 | |||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options | 200,000 | $ 200,000 | |||||
Market-based awards [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 40,000 | 344,500 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | 0 | ||||||
Total stock-based compensation | $ 36,775 | $ 200,000 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 18 months | 3 years | |||||
Aggregate Grant Date Fair Value of Market-Based Restricted Stock Units | $ 1,300,000 | ||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 1 year 3 months 18 days | ||||||
Employee Stock Purchase Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized | 1,300,000 | ||||||
Common Stock, Capital Shares Reserved for Future Issuance | 1,300,000 | 1,300,000 | |||||
Discount Percentage On Purchase Of Stock | 15.00% | ||||||
Equity Option [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Grants in Period, Number of Shares | 0 | ||||||
TVN [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Payment for Pension and Other Postretirement Benefits | $ 0 | ||||||
Director Option Plans 2002 [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized | 400,000 | ||||||
Accounting Standards Update 2016-09 [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Modified Retrospective Cumulative Effect Adjustment to Retained Earnings | $ 69,000 | ||||||
Call Option [Member] | Employee Stock Purchase Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Percentage of fair market value of Common Stock to purchase shares | 85.00% | ||||||
Put Option [Member] | Employee Stock Purchase Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Percentage of fair market value of Common Stock to purchase shares | 15.00% |
Employee Benefit Plans and Stock-based Compensation - Summary of Stock Options Outstanding (Detail) - Stock Options Outstanding [Member] $ / shares in Units, shares in Thousands |
9 Months Ended |
---|---|
Sep. 28, 2018
USD ($)
$ / shares
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Shares, Beginning balance | shares | 3,880 |
Weighted Average Exercise Price, Beginning balance | $ / shares | $ 6.04 |
Grants in Period, Number of Shares | shares | 0 |
Grants in Period, Weighted Average Exercise Price Per Share | $ / shares | $ 0.00 |
Number of Shares, Options exercised | shares | (88) |
Weighted Average Exercise Price, Options exercised | $ / shares | $ 2.93 |
Number of Shares, Forfeited or cancelled | shares | (35) |
Weighted Average Exercise Price, Forfeited or cancelled | $ / shares | $ 4.76 |
Canceled or expired | shares | (538) |
Canceled or Expired, Weighted Average Exercise Price | $ / shares | $ 8.75 |
Number of Shares, Ending balance | shares | 3,219 |
Weighted Average Exercise Price, Ending balance | $ / shares | $ 5.69 |
Weighted Average Remaining Contractual Term | 2 years 6 months |
Aggregate Intrinsic Value | $ | $ 1,907,400 |
Number of Shares, Vested and expected to vest | shares | 3,214 |
Weighted Average Exercise Price, Vested and expected to vest | $ / shares | $ 5.69 |
Weighted Average Remaining Contractual Term (Years), Vested and expected to vest | 2 years 6 months |
Aggregate Intrinsic Value, Vested and expected to vest | $ | $ 1,900,000 |
Number of Shares, Exercisable | shares | 3,051 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 5.74 |
Weighted Average Remaining Contractual Term (Years), Exercisable | 2 years 6 months |
Aggregate Intrinsic Value, Exercisable | $ | $ 1,666,900 |
Employee Benefit Plans and Stock-based Compensation - Summary of Restricted Stock Units Outstanding (Detail) - Restricted Stock Units Outstanding [Member] shares in Thousands |
9 Months Ended |
---|---|
Sep. 28, 2018
$ / shares
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Units, Beginning balance | shares | 2,904 |
Weighted Average Grant Date Fair Value, Beginning balance | $ / shares | $ 5.09 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | shares | 3,835 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ / shares | $ 3.94 |
Number of Units, Shares released | shares | (2,947) |
Vested in Period, Weighted Average Grant Date Fair Value | $ / shares | $ 4.87 |
Number of Units, Forfeited or cancelled | shares | (216) |
Weighted Average Grant Date Fair Value, Forfeited or cancelled | $ / shares | $ 4.95 |
Number of Units, Ending balance | shares | 3,576 |
Weighted Average Grant Date Fair Value, Ending balance | $ / shares | $ 4.05 |
Employee Benefit Plans and Stock-based Compensation - Summary of Projected Benefit Obligation (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 28, 2018 |
Sep. 29, 2017 |
Sep. 28, 2018 |
Sep. 29, 2017 |
|
Employee Benefits and Share-based Compensation, Noncash [Abstract] | ||||
Service cost | $ 59 | $ 55 | $ 185 | $ 165 |
Interest cost | 18 | 16 | 56 | 48 |
Recognized net actuarial loss | 0 | 1 | 0 | 4 |
Net periodic benefit cost included in operating loss | $ 77 | $ 72 | $ 241 | $ 217 |
Employee Benefit Plans and Stock-based compensation - Stock-based Compensation in Opex (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 28, 2018 |
Sep. 29, 2017 |
Sep. 28, 2018 |
Sep. 29, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation | $ 5,433 | $ 3,720 | $ 14,202 | $ 11,107 |
Cost of Revenue [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation | 614 | 478 | 1,577 | 1,623 |
Research and Development Expense [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation | 1,676 | 1,183 | 4,298 | 3,496 |
Selling, General and Administrative Expenses [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation | 3,143 | 2,059 | 8,327 | 5,988 |
Operating Expense [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation | $ 4,819 | $ 3,242 | $ 12,625 | $ 9,484 |
Employee Benefit Plans and Stock-based Compensation - Valuation Assumptions for Stock Options (Details) - Employee Stock Option [Member] |
9 Months Ended |
---|---|
Sep. 28, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term (years) | 4 years 7 months 6 days |
Volatility | 43.00% |
Risk-free interest rate | 1.70% |
Expected dividends | 0.00% |
Employee Benefit Plans and Stock-based Compensation - Summary of Stock Awards Valuation Assumptions (Details) - Employee Stock Purchase Plan - $ / shares |
6 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2018 |
Jun. 29, 2018 |
Dec. 31, 2017 |
Jun. 30, 2017 |
|
Purchase Period July 2, 2018 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected term (years) | 6 months | |||
Volatility | 60.00% | |||
Risk-free interest rate | 1.70% | |||
Expected dividends | 0.00% | |||
Estimated weighted average fair value per share at purchase date | $ 1.34 | |||
Purchase Period December 31, 2017 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected term (years) | 6 months | |||
Volatility | 43.00% | |||
Risk-free interest rate | 1.20% | |||
Expected dividends | 0.00% | |||
Estimated weighted average fair value per share at purchase date | $ 1.42 | |||
Purchase Period June 30, 2017 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected term (years) | 6 months | |||
Volatility | 41.00% | |||
Risk-free interest rate | 1.00% | |||
Expected dividends | 0.00% | |||
Estimated weighted average fair value per share at purchase date | $ 1.40 | |||
Scenario, Forecast [Member] | Purchase Period December 31, 2018 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected term (years) | 6 months | |||
Volatility | 51.00% | |||
Risk-free interest rate | 2.10% | |||
Expected dividends | 0.00% | |||
Estimated weighted average fair value per share at purchase date | $ 1.32 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 28, 2018 |
Sep. 29, 2017 |
Sep. 28, 2018 |
Sep. 29, 2017 |
|
Income Tax Disclosure [Abstract] | ||||
Loss before income taxes | $ (6,888) | $ (17,498) | $ (21,526) | $ (72,678) |
Provision for (benefit from) income taxes | $ 870 | $ (1,915) | $ 2,839 | $ (1,568) |
Effective income tax rate | (12.60%) | 10.90% | (13.20%) | 2.20% |
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Jan. 01, 2017 |
Sep. 28, 2018 |
Sep. 29, 2017 |
Mar. 31, 2017 |
Sep. 28, 2018 |
Sep. 29, 2017 |
Dec. 31, 2017 |
|
Income Tax Contingency [Line Items] | |||||||
Effective income tax rate | (12.60%) | 10.90% | (13.20%) | 2.20% | |||
Federal statutory income tax rate | 21.00% | 35.00% | |||||
Effective Income Tax Rate Reconciliation, Foreign Income Tax Rate Differential, Amount | $ 1,200 | ||||||
Effective Income Tax Rate Reconciliation, Tax Contingency, Amount | $ 2,400 | ||||||
Unrecognized Tax Benefits | $ 17,600 | $ 17,600 | |||||
Unrecognized tax benefits that would impact the provision for income taxes | 4,800 | 4,800 | |||||
Interest and possible penalties related to uncertain tax positions | 500 | 500 | |||||
Decrease in Unrecognized Tax Benefits is Reasonably Possible | 1,500 | ||||||
Unrecognized Tax Benefits, Reduction Resulting from Lapse of Applicable Statute of Limitations | 300 | ||||||
Accumulated deficit | $ (2,070,746) | $ (2,070,746) | $ (2,057,812) | ||||
Accounting Standards Update 2016-09 [Member] | |||||||
Income Tax Contingency [Line Items] | |||||||
Accumulated deficit | $ 0 | ||||||
Accounting Standards Update 2016-09 [Member] | SEC Schedule, 12-09, Valuation Allowance, Deferred Tax Asset [Member] | |||||||
Income Tax Contingency [Line Items] | |||||||
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | 4,600 | ||||||
Accounting Standards Update 2016-09 [Member] | Deferred Tax Assets Gross | |||||||
Income Tax Contingency [Line Items] | |||||||
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | 4,600 | ||||||
Accounting Standards Update 2016-16 [Member] | |||||||
Income Tax Contingency [Line Items] | |||||||
Cumulative Effect on Retained Earnings, Net of Tax | $ 1,400 | ||||||
Deferred Tax Assets, Net | 1,100 | ||||||
Deferred Tax Assets, Valuation Allowance | 2,100 | ||||||
Deferred Tax Assets, Tax Deferred Expense | $ 300 |
Net Loss Per Share - Numerators and Denominators of Basic and Diluted Net Income (Loss) Per Share Computations (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 28, 2018 |
Sep. 29, 2017 |
Sep. 28, 2018 |
Sep. 29, 2017 |
|
Numerator: | ||||
Net loss | $ (7,758) | $ (15,583) | $ (24,365) | $ (71,110) |
Denominator: | ||||
Basic and diluted | 86,321 | 81,445 | 85,188 | 80,618 |
Net loss per share: | ||||
Basic and diluted | $ (0.09) | $ (0.19) | $ (0.29) | $ (0.88) |
Net Loss Per Share - Anti-dilutive Securities (Detail) - $ / shares |
3 Months Ended | 9 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Sep. 28, 2018 |
Sep. 29, 2017 |
Sep. 28, 2018 |
Sep. 29, 2017 |
Dec. 31, 2015 |
||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||
Potentially dilutive equity awards outstanding | [1] | 8,569,000 | 9,490,000 | 7,993,000 | 9,147,000 | |||||
Debt Instrument, Convertible, Conversion Price | $ 5.75 | $ 5.75 | $ 5.75 | $ 5.75 | $ 5.75 | |||||
Stock Option | ||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||
Potentially dilutive equity awards outstanding | 3,219,000 | 4,377,000 | 3,386,000 | 4,628,000 | ||||||
Restricted Stock Units (RSUs) | ||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||
Potentially dilutive equity awards outstanding | 3,266,000 | 3,213,000 | 2,933,000 | 3,107,000 | ||||||
Employee Stock Purchase Plan | ||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||
Potentially dilutive equity awards outstanding | 529,000 | 1,118,000 | 635,000 | 630,000 | ||||||
Warrant | ||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||
Potentially dilutive equity awards outstanding | [2] | 1,555,000 | 782,000 | 1,039,000 | 782,000 | |||||
Convertible Debt Securities | ||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||
Potentially dilutive equity awards outstanding | 22,304,348 | 22,304,348 | 22,304,348 | 22,304,348 | ||||||
|
Warrants (Details) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Jul. 31, 2018
USD ($)
Measurement_Input
shares
|
Sep. 28, 2018
USD ($)
|
Sep. 29, 2017
USD ($)
|
Sep. 28, 2018
USD ($)
|
Sep. 29, 2017
USD ($)
|
Sep. 26, 2016
USD ($)
$ / shares
shares
|
|
Class of Warrant or Right [Line Items] | ||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 7,816,162 | |||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares | $ 4.76 | |||||
Warrants and Rights Outstanding | $ | $ 1,600 | |||||
Fair Value Adjustment of Warrants | $ | $ 790 | $ 1,185 | ||||
Comcast Product Supply Agreement [Member] | ||||||
Class of Warrant or Right [Line Items] | ||||||
Class of Warrant or Right, Outstanding | 781,617 | |||||
Comcast Milestones Achievement [Member] | ||||||
Class of Warrant or Right [Line Items] | ||||||
Class of Warrant or Right, Unissued | 1,954,042 | |||||
Comcast Milestone Acceptance Of Completion Of Field Trials [Member] | ||||||
Class of Warrant or Right [Line Items] | ||||||
Class of Warrant or Right, Outstanding | 1,172,425 | |||||
Class of Warrant or Right, Unissued | 1,172,425 | |||||
Fair Value of Warrants On Vesting Date Using Black-Scholes Option Model | $ | $ 2,300 | |||||
Comcast Specified Tranches [Member] | ||||||
Class of Warrant or Right [Line Items] | ||||||
Class of Warrant or Right, Unissued | 781,617 | |||||
Comcast Exceeding Specified Cumulative Purchase Volume [Member] | ||||||
Class of Warrant or Right [Line Items] | ||||||
Class of Warrant or Right, Unissued | 1,172,425 | |||||
Sales Revenue, Goods, Net [Member] | Comcast Product Supply Agreement [Member] | ||||||
Class of Warrant or Right [Line Items] | ||||||
Fair Value Adjustment of Warrants | $ | $ 800 | $ (400) | $ 1,200 | $ 38 | ||
Measurement Input, Expected Term [Member] | Comcast Product Supply Agreement [Member] | ||||||
Class of Warrant or Right [Line Items] | ||||||
Fair Value Assumptions, Expected Term (Deprecated 2018-01-31) | 5 years 2 months 12 days | |||||
Measurement Input, Risk Free Interest Rate [Member] | Comcast Product Supply Agreement [Member] | ||||||
Class of Warrant or Right [Line Items] | ||||||
Fair Value Assumptions, Expected Volatility Rate (Deprecated 2018-01-31) | Measurement_Input | 0.45 | |||||
Measurement Input, Price Volatility [Member] | Comcast Product Supply Agreement [Member] | ||||||
Class of Warrant or Right [Line Items] | ||||||
Fair Value Assumptions, Expected Volatility Rate (Deprecated 2018-01-31) | Measurement_Input | 0.029 | |||||
Measurement Input, Expected Dividend Rate [Member] | Comcast Product Supply Agreement [Member] | ||||||
Class of Warrant or Right [Line Items] | ||||||
Fair Value Assumptions, Expected Volatility Rate (Deprecated 2018-01-31) | Measurement_Input | 0.000 |
Segment Information - Summary Financial Infomation by reportable segments (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Sep. 28, 2018
USD ($)
|
Sep. 29, 2017
USD ($)
|
Sep. 28, 2018
USD ($)
segment
|
Sep. 29, 2017
USD ($)
|
||||
Segment Reporting Information [Line Items] | |||||||
Revenue | $ 100,616 | $ 92,014 | $ 289,903 | $ 257,272 | |||
Gross Profit | 50,102 | 47,025 | 148,888 | 121,248 | |||
Operating Income (Loss) | (3,651) | (14,206) | $ (12,336) | (62,786) | |||
Number of Reportable Segments | segment | 2 | ||||||
Video [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenue | 73,344 | [1] | 84,155 | $ 224,300 | 231,876 | ||
Gross Profit | 41,937 | [1] | 48,283 | 126,721 | 126,776 | ||
Operating Income (Loss) | 5,258 | [1] | 7,009 | 13,492 | (7,774) | ||
Cable Access [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenue | 28,062 | [1] | 7,859 | 66,788 | 25,396 | ||
Gross Profit | 10,871 | [1] | 1,064 | 29,698 | 4,973 | ||
Operating Income (Loss) | 395 | [1] | (5,357) | (578) | (18,848) | ||
Operating Segments [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenue | 101,406 | [1] | 92,014 | 291,088 | 257,272 | ||
Gross Profit | 52,808 | [1] | 49,347 | 156,419 | 131,749 | ||
Operating Income (Loss) | $ 5,653 | [1] | 1,652 | $ 12,914 | (26,622) | ||
Operating Income (Loss) [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Prior period reclassification adjustment | $ 2,700 | $ 5,900 | |||||
|
Segment Information Segment Income or Loss Reconciliation (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Sep. 28, 2018 |
Sep. 29, 2017 |
Sep. 28, 2018 |
Sep. 29, 2017 |
||||
Segment Reporting Information [Line Items] | |||||||
Operating Income (Loss) | $ (3,651) | $ (14,206) | $ (12,336) | $ (62,786) | |||
Amortization of warrants | (790) | (1,185) | |||||
Unallocated Corporate Expenses | (53,753) | (61,231) | (161,224) | (184,034) | |||
Stock-based compensation | (5,433) | (3,720) | (14,202) | (11,107) | |||
Amortization of intangibles | (2,087) | (2,088) | (6,281) | (6,232) | |||
Nonoperating Income (Expense) | (3,237) | (3,292) | (9,190) | (9,892) | |||
Loss before income taxes | (6,888) | (17,498) | (21,526) | (72,678) | |||
Operating Segments [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Operating Income (Loss) | 5,653 | [1] | 1,652 | 12,914 | (26,622) | ||
Corporate, Non-Segment [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Unallocated Corporate Expenses | $ (994) | $ (10,050) | $ (3,582) | $ (18,825) | |||
|
Commitments and Contingencies - Future Minimum Lease Payments Under Non-cancelable Operating Leases (Detail) $ in Thousands |
Sep. 28, 2018
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2018 (remaining three months) | $ 3,433 |
2019 | 13,091 |
2020 | 9,921 |
2021 | 4,276 |
2022 | 2,525 |
Thereafter | 9,325 |
Total | $ 42,571 |
Commitments and Contingencies - Summary of Warranty Accrual Included in Accrued Liabilities (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 28, 2018 |
Sep. 29, 2017 |
Sep. 28, 2018 |
Sep. 29, 2017 |
|
Commitments and Contingencies Disclosure [Abstract] | ||||
Balance at beginning of period | $ 4,647 | $ 4,142 | $ 4,381 | $ 4,862 |
Accrual for current period warranties | 1,563 | 1,354 | 5,013 | 3,849 |
Warranty costs incurred | (1,461) | (1,155) | (4,645) | (4,370) |
Balance at end of period | $ 4,749 | $ 4,341 | $ 4,749 | $ 4,341 |
Commitments and Contingencies - Additional Information (Detail) $ in Millions |
1 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Oct. 24, 2017
USD ($)
|
Oct. 30, 2011
Patents
|
Dec. 31, 2017
USD ($)
|
Sep. 28, 2018
USD ($)
|
Sep. 29, 2017
USD ($)
|
|
Other Commitments [Line Items] | |||||
Non-cancelable purchase commitments | $ 45.1 | ||||
Maximum amount of potential future payments under the company's financial guarantees | 3.3 | ||||
Contract Manufacturing [Member] | |||||
Other Commitments [Line Items] | |||||
Bank Guarantees and Standby Letters of Credit | 0.8 | ||||
Indemnification [Member] | |||||
Other Commitments [Line Items] | |||||
Accrual for indemnification provisions | 0.0 | ||||
TVN [Member] | Guarantee Obligations [Member] | |||||
Other Commitments [Line Items] | |||||
Bank Guarantees and Standby Letters of Credit | 1.3 | ||||
Avid [Member] | |||||
Other Commitments [Line Items] | |||||
Loss Contingency, Patents Allegedly Infringed, Number | Patents | 2 | ||||
Estimated Litigation Liability | $ 6.0 | ||||
Payments for litigation settlement | $ 2.5 | ||||
Avid [Member] | Selling, General and Administrative Expenses [Member] | |||||
Other Commitments [Line Items] | |||||
Litigation Settlement, Expense | $ 6.0 | ||||
Settled Litigation Payment Second Quarter of 2019 [Member] | Avid [Member] | |||||
Other Commitments [Line Items] | |||||
Estimated Litigation Liability, Noncurrent | 1.5 | ||||
Settled Litigation Payment Third Quarter of 2020 [Member] | Avid [Member] | |||||
Other Commitments [Line Items] | |||||
Estimated Litigation Liability, Noncurrent | 2.0 | ||||
Foreign Line of Credit [Member] | Performance Guarantee [Member] | Guarantee Obligations [Member] | |||||
Other Commitments [Line Items] | |||||
Line of Credit Facility, Current Borrowing Capacity | 2.0 | ||||
Domestic Line of Credit [Member] | Performance Guarantee [Member] | Guarantee Obligations [Member] | |||||
Other Commitments [Line Items] | |||||
Bank Guarantees and Standby Letters of Credit | $ 2.2 | ||||
Line of Credit Facility, Fair Value of Amount Outstanding | $ 0.0 |
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