<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 29, 2000
REGISTRATION NO. 333-____________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------
HARMONIC INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
-----------------
DELAWARE 77-0201147
--------------------------------- ----------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
549 BALTIC WAY
SUNNYVALE, CALIFORNIA 94089
(408) 542-2500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
-----------------
ANTHONY J. LEY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
HARMONIC INC.
549 BALTIC WAY
SUNNYVALE, CALIFORNIA 94089
(408) 542-2500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
-----------------
Copies to:
JEFFREY D. SAPER, ESQ.
ROBERT G. DAY, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CA 94304
(650) 493-9300
FAX: (650) 493-6811
-----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective
date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 (the "Securities Act"), other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
-----------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================================
TITLE OF EACH CLASS OF AMOUNT TO BE REGISTERED PROPOSED PROPOSED AMOUNT OF
SECURITIES TO BE REGISTERED MAXIMUM OFFERING MAXIMUM AGGREGATE REGISTRATION FEE
PRICE PER SHARE OFFERING PRICE
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock $.001 par value.......... 286,123 shares $28.34375 $8,109,798.78 $2,141.00
===================================================================================================================================
</TABLE>
(1) The price of $28.34375 per share, which was the average of the high and low
prices of the Registrant's Common Stock on the Nasdaq National Market on
August 23, 2000, is set forth solely for the purposes of calculating the
registration fee in accordance with Rule 457(c) of the Securities Act of
1933, as amended.
-----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SECTION
8(a), MAY DETERMINE.
================================================================================
<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PROSPECTUS
(SUBJECT TO COMPLETION, DATED AUGUST 29, 2000)
286,123 Shares
HARMONIC INC.
Common Stock
-----------------
This prospectus relates to the public offering, which is not being
underwritten, of up to 286,123 shares of our Common Stock which is held by some
of our current stockholders. The selling stockholders identified in this
prospectus acquired their shares of our Common Stock in a private transaction in
which Harmonic Inc. acquired all of the capital stock of Cogent Technology,
Inc., a Delaware corporation.
The prices at which such stockholders may sell the shares will be determined
by the prevailing market price for the shares or in negotiated transactions. We
will not receive any of the proceeds from the sale of the shares.
Our Common Stock is listed on the Nasdaq National Market under the symbol
"HLIT." On August 25, 2000, the closing price for our Common Stock was $28.75
per share.
-----------------
INVESTING IN THE COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 4.
-----------------
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE
NOT APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS
IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
-----------------
The date of this Prospectus is ________ ___,2000.
<PAGE> 3
No person has been authorized to give any information or to make any
representations other than those contained in this prospectus in connection with
the offering made hereby, and if given or made, such information or
representations must not be relied upon as having been authorized by Harmonic
Inc. (referred to in this prospectus as "Harmonic," the "Company" and "we"), any
selling stockholder or by any other person. Neither the delivery of this
prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that information herein is correct as of any time subsequent to
the date hereof. This prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any security other than the securities covered
by this prospectus, nor does it constitute an offer to or solicitation of any
person in any jurisdiction in which such offer or solicitation may not lawfully
be made.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public conference rooms. Our SEC filings are also available to the public
from the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information filed with the
SEC will update and supersede this information. We incorporate by reference the
documents listed below and any future filings made with the SEC under Section
13a, 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until our
offering is completed.
(a) The Registrant's Annual Report on Forms 10-K and 10-K/A filed on
March 30, 2000 and May 15, 2000, respectively, for the year ended
December 31, 1999 filed pursuant to Sections 13(a) or 15(d) of the
Securities Exchange Act, as amended (the "Exchange Act").
(b) The Registrant's quarterly reports on Forms 10-Q for the quarters
ended March 31, 2000 and June 30, 2000, respectively, filed
pursuant to Section 13(a) or 15(d) of the Exchange Act.
(c) The Registrant's Amended Current Report on Forms 8-K and 8-K/A
filed on May 4, 2000 and July 17, 2000, respectively.
(d) The description of the Registrant's Common Stock contained in the
Registrant's Registration Statement on Form 8-A dated April 6,
1995, filed pursuant to Section 12 of the Securities Exchange Act
of 1934, as amended, including any amendment or report filed for
the purpose of updating such description.
All documents filed by the Registrant pursuant to Section 13(a), 13(c),
14 and 15(d) of the Exchange Act after the date of this registration statement
and prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
registration statement and to be part hereof from the date of filing such
documents.
-1-
<PAGE> 4
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Robin N. Dickson
Chief Financial Officer
Harmonic Inc.
549 Baltic Way
Sunnyvale, California 94089
(408) 452-2500
You should rely only on the information incorporated by reference or
provided in this prospectus or the prospectus supplement. We have authorized no
one to provide you with different information. We are not making an offer of
these securities in any state where the offer is not permitted. You should not
assume that the information in this prospectus or the prospectus supplement is
accurate as of any date other than the date on the front of the document.
HARMONIC
Harmonic Inc. ("Harmonic" or the "Company") designs, manufactures and
markets digital and fiber optic systems for delivering video, voice and data
services over cable, satellite and wireless networks. Historically, almost all
of our sales have been derived directly or indirectly from sales of fiber optic
transmission systems to cable television operators. With the introduction of our
TRANsend digital headend products in 1997 and the subsequent purchase of New
Media Communication Ltd., which changed its name to Harmonic Data Systems Ltd.,
we broadened our product offering to enable delivery of digital video, voice and
data over satellite and wireless networks and cable systems.
In order to further expand our digital systems capability, the Company
entered into an Agreement and Plan of Merger and Reorganization with C-Cube
Microsystems, Inc. ("C-Cube") on October 27, 1999, pursuant to which C-Cube
merged into Harmonic (the "Merger Agreement"). Under the terms of the Merger
Agreement, C-Cube spun off its semiconductor business as a separate publicly
traded company. C-Cube then merged into Harmonic and Harmonic therefore acquired
C-Cube's DiviCom business, which provides MPEG-2 encoding products and systems
for digital television. The merger was structured as a tax-free exchange of
stock and has been accounted for under the purchase method of accounting. In the
merger, each share of common stock of C-Cube was converted into 0.5427 shares of
Harmonic common stock. The purchase price, including merger-related costs, was
approximately $1.8 billion.
The merger closed on May 3, 2000, and Harmonic has consolidated the
results of the DiviCom business in its financial statements from that date
forward. The merged company has been organized into two operating segments,
Broadband Access Networks ("BAN") for fiber optic systems and Convergent Systems
("CS") for digital headend systems. While the two segments have been organized
generally around the pre-merger Harmonic fiber optics systems and the DiviCom
digital headend systems, respectively, these segments do not correspond to the
pre-merger companies in significant ways. For example, Harmonic's TRANsend and
CyberStream product lines are now part of the CS segment. Each of these segments
has its own separate management team, with a worldwide sales, sales support and
systems integration group supporting both segments.
-2-
<PAGE> 5
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated herein by reference
contain forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. Words such as "anticipates,"
"expects," "intends," "plans," "believes," "seeks," "estimates," variations of
such words and similar expressions are intended to identify such forward looking
statements. These statements are not guarantees of future performance and are
subject to certain risks, uncertainties and assumptions that are difficult to
predict. Therefore, actual results could differ materially from those expressed
or forecasted in any such forward-looking statements as a result of certain
factors, including those set forth in "Risk Factors," as well as those noted in
the documents incorporated herein by reference. In connection with
forward-looking statements which appear in these disclosures, investors should
carefully review the factors set forth in this prospectus under "Risk Factors."
-3-
<PAGE> 6
RISK FACTORS
You should carefully consider the risks described below before making an
investment decision. The risks and uncertainties described below are not the
only ones facing our company. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also impair our business
operations.
If any of the following risks actually occur, our business, financial
condition or results of operations could be materially adversely affected. In
such case, the trading price of our common stock could decline and you could
lose all or part of your investment.
This prospectus also contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including the risks faced by us described below and elsewhere in this
prospectus.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk represents the risk of loss that may impact the financial
position, results of operations or cash flows of Harmonic due to adverse changes
in market prices and rates. Harmonic is exposed to market risk because of
changes in interest rates and foreign currency exchange rates as measured
against the U.S. Dollar and currencies of Harmonic's subsidiaries.
From time to time Harmonic enters into contracts with customers which
are denominated in foreign currencies and which, if not hedged, expose Harmonic
to market risk from changes in foreign currency exchange rates. In addition,
Harmonic has subsidiaries in Israel and the United Kingdom which incur expenses
principally in local currencies, although sales are generally denominated in
U.S. dollars. While Harmonic does not anticipate that near-term changes in
exchange rates will have a material impact on future operating results, fair
values or cash flows, Harmonic cannot assure you that sudden and significant
changes in the value of foreign currencies, particularly the Israeli Shekel or
British Pound, would not harm Harmonic's financial condition and results of
operations.
Harmonic's exposure to market risk for changes in interest rates relates
primarily to its investment portfolio of marketable debt securities of various
issuers, types and maturities. Harmonic does not use derivative instruments in
its investment portfolio, and its investment portfolio only includes highly
liquid instruments with an original maturity of less than two years. These
investments are classified as available for sale and the Company states its
investments at fair value, with unrealized gains and losses reported in other
comprehensive income. While Harmonic generally holds its investment securities
to maturity there is risk that losses could be incurred if it were to sell any
of its securities prior to maturity.
FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS
OUR OPERATING RESULTS ARE LIKELY TO FLUCTUATE SIGNIFICANTLY AND MAY FAIL TO MEET
OR EXCEED THE EXPECTATIONS OF SECURITIES ANALYSTS OR INVESTORS, CAUSING OUR
STOCK PRICE TO DECLINE
Our operating results have fluctuated in the past and are likely to
continue to fluctuate in the future, on an annual and a quarterly basis, as a
result of several factors, many of which are outside of our control. Some of the
factors that may cause these fluctuations include:
- the level of capital spending of our customers, both in the U.S.
and in foreign markets;
- changes in market demand;
-4-
<PAGE> 7
- the timing and amount of customer orders;
- the timing of revenue from systems contracts which may span several
quarters;
- competitive market conditions;
- our unpredictable sales cycles;
- our ability to integrate the acquired DiviCom business into
Harmonic's operations;
- new product introductions by our competitors or by us;
- changes in domestic and international regulatory environments;
- market acceptance of new or existing products;
- the cost and availability of components, subassemblies and modules;
- the mix of our customer base and sales channels;
- the mix of our products sold;
- our development of custom products and software;
- the level of international sales; and
- economic conditions specific to the cable and satellite industries,
and general economic conditions.
In addition, we often recognize a substantial portion of our revenues in
the last month of the quarter. We establish our expenditure levels for product
development and other operating expenses based on projected sales levels, and
expenses are relatively fixed in the short term. Accordingly, variations in
timing of sales can cause significant fluctuations in operating results. In
addition, because a significant portion of our business is derived from orders
placed by a limited number of large customers, the timing of such orders can
also cause significant fluctuations in our operating results. Our expenses for
any given quarter are typically based on expected sales and if sales are below
expectations in any given quarter, the adverse impact of the shortfall on our
operating results may be magnified by our inability to adjust spending to
compensate for the shortfall. As a result of all these factors, our operating
results in one or more future periods may fail to meet or exceed the
expectations of securities analysts or investors. In that event, the trading
price of our common stock would likely decline. In this regard, due to lower
than expected sales to AT&T, and lower than expected sales in the CS segment, we
failed to meet our internal expectations as well as the expectations of
securities analysts and investors during the second quarter of 2000, and the
price of our common stock declined significantly.
WE DEPEND ON CABLE AND SATELLITE INDUSTRY CAPITAL SPENDING FOR A SUBSTANTIAL
PORTION OF OUR REVENUE AND ANY DECREASE OR DELAY IN CAPITAL SPENDING IN THESE
INDUSTRIES WOULD NEGATIVELY IMPACT OUR RESOURCES, OPERATING RESULTS AND
FINANCIAL CONDITION.
Prior to the merger with C-Cube, almost all of Harmonic's historic sales
had been derived from sales to cable television operators and broadcasters, and
it expects these sales to constitute a substantial majority for the foreseeable
future. Almost all of the DiviCom business' historic sales have been derived
from sales to
-5-
<PAGE> 8
satellite operators, telephone companies and cable operators. Demand for the
combined company's products in the future will depend on the magnitude and
timing of capital spending by cable television operators, broadcasters,
satellite operators and telephone companies for constructing and upgrading of
their systems.
These capital spending patterns are dependent on a variety of factors,
including:
- access to financing;
- annual budget cycles;
- the status of federal, local and foreign government regulation of
telecommunications and television broadcasting;
- overall demand for communication services and the acceptance of new
video, voice and data services;
- evolving industry standards and network architectures;
- competitive pressures;
- discretionary customer spending patterns;
- general economic conditions.
In the past, specific factors contributing to reduced capital spending
have included:
- uncertainty related to development of digital video and cable modem
industry standards;
- delays associated with the evaluation of new services and system
architectures by many cable television operators;
- emphasis on marketing and customer service strategies by cable
television operators instead of construction of networks; and
- general economic conditions in international markets.
While our net sales increased during the last eight quarters from the
level achieved in the first quarter of 1998 due primarily to increased spending
in the North American cable television industry, spending by cable television
operators outside of North America generally remained weak. While net sales
outside of North America increased during the last three quarters compared to
the first quarter of 1998 we cannot predict if cable television spending outside
of North America will continue to grow. Although the Company's sales increased
significantly in the second quarter of 2000 compared to the first quarter of
2000, sales were below our expectations within each operating segment. BAN sales
were lower than expected and below the level achieved in the first quarter of
2000 due to reduced sales to AT&T, which have continued to decline from levels
achieved in the third quarter of 1999. For a more detailed discussion regarding
risks related to AT&T and other major customers, see "Our Customer Base Is
Concentrated And The Loss Of One Or More Of Our Key Customers Would Harm Our
Business. The Loss Of AT&T Or Any Other Key Customer Would Have A Negative
Effect On Our Business" below. The lower CS sales are due in part to slower
spending by satellite operators and to the impact of organizational changes
resulting from the C-Cube merger. The Company is unable to predict when cable
and satellite industry spending will increase. In addition, cable
-6-
<PAGE> 9
television capital spending can be subject to the effects of seasonality, with
fewer construction and upgrade projects typically occurring in winter months and
otherwise being affected by inclement weather.
OUR CUSTOMER BASE IS CONCENTRATED AND THE LOSS OF ONE OR MORE OF OUR KEY
CUSTOMERS WOULD HARM OUR BUSINESS. THE LOSS OF AT&T OR ANY OTHER KEY CUSTOMER
WOULD HAVE A NEGATIVE EFFECT ON OUR BUSINESS.
Historically, a significant majority of our sales and sales of DiviCom
have been to relatively few customers. Sales to Harmonic's ten largest customers
in 1998, 1999 and the first half of 2000 accounted for approximately 66%, 75%
and 61% of net sales, respectively. Due in part to the consolidation of
ownership of domestic cable television systems, we expect that sales to AT&T,
RCN and relatively few other customers will continue to account for a
significant percentage of net sales of the combined company for the foreseeable
future. In the second quarter of 2000, sales to AT&T accounted for 10% of our
net sales compared to 28% in the prior quarter and 40% in the second quarter of
1999. Sales to AT&T have continued to decline from a record 52% of net sales in
the third quarter of 1999. We cannot assure you that sales to other customers
will compensate for any further reduction in sales to AT&T. Sales to RCN
accounted for 12% of our net sales in the second quarter of 2000 compared to 15%
in the prior quarter and less than 10% in the second quarter of 1999. Almost all
of our sales are made on a purchase order or system contract basis, and none of
our customers has entered into a long-term agreement requiring it to purchase
our products. The loss of, or any reduction in orders from, a significant
customer would harm our business.
WE HAVE EXPERIENCED DIFFICULTIES INTEGRATING THE DIVICOM BUSINESS OF C-CUBE.
In addition to the risks generally associated with acquisitions, there
are a number of significant risks directly associated with our merger with
C-Cube. In particular, the successful combination of Harmonic and C-Cube
requires substantial attention from management. The anticipated benefits of the
merger will not be achieved unless the operations of the DiviCom business of
C-Cube are successfully combined with those of Harmonic in a timely manner. To
date, we have had difficulty in assimilating and integrating disparate
information systems and personnel into a combined corporation. These
difficulties are increased due to our limited personnel, management and other
resources. The successful combination of the two companies requires integration
of the companies' product offerings and the coordination of their research and
development and sales and marketing efforts. The process of combining the two
organizations has caused interruption of, and a loss of momentum in, the
activities of both of the organizations' businesses, and we believe that this
diversion may have caused certain customers to defer purchasing decisions. The
diversion of the attention of management from the day-to-day operations of the
combined company, or difficulties encountered in the transition and integration
process, could materially and adversely affect our business, financial condition
and operating results. In addition, our success depends, in part, on the
retention and integration of key management, technical, marketing, sales and
customer support personnel of the DiviCom business, and, in particular, the
retention of these key employees during the transitional period following the
merger. We have experienced the loss of certain key employees since the merger,
principally due to intense competition for qualified technical and other
personnel in the San Francisco Bay Area. The loss of key employees and managers
has adversely affected the acquired DiviCom business and could continue to
adversely affect our business and operating results.
WE DEPEND ON OUR INTERNATIONAL SALES AND ARE SUBJECT TO THE RISKS ASSOCIATED
WITH INTERNATIONAL OPERATIONS, WHICH MAY NEGATIVELY AFFECT OUR PROFITABILITY.
Sales to customers outside of the United States in 1998, 1999 and first
half of 2000 represented 43%, 30% and 35% of net sales, respectively, and we
expect that international sales will continue to represent a
-7-
<PAGE> 10
substantial portion of our net sales for the foreseeable future. Our
international operations are subject to a number of risks, including:
- changes in foreign government regulations and telecommunications
standards;
- import and export license requirements, tariffs, taxes and other
trade barriers;
- fluctuations in currency exchange rates;
- difficulty in collecting accounts receivable;
- the burden of complying with a wide variety of foreign laws,
treaties and technical standards;
- difficulty in staffing and managing foreign operations; and
- political and economic instability.
While our international sales are typically denominated in U.S. dollars,
fluctuations in currency exchange rates could cause our products to become
relatively more expensive to customers in a particular country, leading to a
reduction in sales or profitability in that country. Gains and losses on the
conversion to U.S. dollars of accounts receivable, accounts payable and other
monetary assets and liabilities arising from international operations may
contribute to fluctuations in operating results. Furthermore, payment cycles for
international customers are typically longer than those for customers in the
United States. Unpredictable sales cycles could cause us to fail to meet or
exceed the expectations of security analysts and investors for any given period.
Further, foreign markets may not continue to develop.
WE MUST BE ABLE TO MANAGE EXPENSES AND INVENTORY RISKS ASSOCIATED WITH MEETING
THE DEMAND OF OUR CUSTOMERS.
From time to time, we receive indications from our customers as to their
future plans and requirements to ensure that we will be prepared to meet their
demand for our products. In the past, however, we have received such indications
but, on occasion, we did not ultimately receive purchase orders for our
products. We must be able to effectively manage expenses and inventory risks
associated with meeting potential demand for our products. In addition, if we
fail to meet customers' supply expectations, we may lose business from such
customers. If we expend resources and purchase materials to manufacture products
and such products are not purchased, our business and operating results could
suffer.
THE MARKETS IN WHICH WE OPERATE ARE INTENSELY COMPETITIVE AND MANY OF OUR
COMPETITORS ARE LARGER AND MORE ESTABLISHED.
The markets for cable television fiber optics systems and digital video
broadcasting systems are extremely competitive and have been characterized by
rapid technological change and declining average selling prices. Harmonic's
competitors in the cable television fiber optics systems business include
significantly larger corporations such as ADC Telecommunications, ANTEC, a
company owned in part by AT&T, General Instrument, which has been acquired by
Motorola, Philips and Scientific-Atlanta. Additional competition could come from
new entrants in these markets, such as Lucent Technologies and Cisco Systems.
In the digital and video broadcasting systems business, we compete with
vertically integrated system suppliers including Motorola, Scientific-Atlanta,
Tandberg, Thomson Broadcast Systems and Philips, as well as more specialized
suppliers including SkyStream and Terayon.
-8-
<PAGE> 11
Most of our competitors are substantially larger and have greater
financial, technical, marketing and other resources than Harmonic. Many of these
large organizations are in a better position to withstand any significant
reduction in capital spending by customers in these markets. They often have
broader product lines and market focus and will therefore not be as susceptible
to downturns in a particular market. In addition, many of our competitors have
been in operation longer than we have and therefore have more long standing and
established relationships with domestic and foreign customers. We may not be
able to compete successfully in the future and competition may harm our
business.
If any of our competitors' products or technologies were to become the
industry standard, our business could be seriously harmed. For example, U.S.
cable operators have to date mostly purchased proprietary digital systems from
Motorola and Scientific-Atlanta. While certain operators have made limited
purchases of the "open" systems provided by Harmonic, we cannot assure you that
our digital products will find broad market acceptance with U.S. cable
operators. In addition, companies that have historically not had a large
presence in the broadband communications equipment market have begun recently to
expand their market share through mergers and acquisitions. The continued
consolidation of our competitors could have a significant negative impact on us.
Further, our competitors, particularly competitors of our digital and video
broadcasting systems' business may bundle their products or incorporate
functionality into existing products in a manner that discourages users from
purchasing our products or which may require us to lower our selling prices
resulting in lower gross margins.
BROADBAND COMMUNICATIONS MARKETS ARE RELATIVELY IMMATURE AND CHARACTERIZED BY
RAPID TECHNOLOGICAL CHANGE.
Broadband communications markets are relatively immature, making it
difficult to accurately predict the markets' future growth rates, sizes or
technological directions. In view of the evolving nature of these markets, it is
possible that cable television operators, telephone companies or other suppliers
of broadband wireless and satellite services will decide to adopt alternative
architectures or technologies that are incompatible with our current or future
products. If we are unable to design, develop, manufacture and sell products
that incorporate or are compatible with these new architectures or technologies,
our business will suffer.
WE NEED TO DEVELOP AND INTRODUCE NEW AND ENHANCED PRODUCTS IN A TIMELY MANNER TO
REMAIN COMPETITIVE.
Broadband communications markets are characterized by continuing
technological advancement, changes in customer requirements and evolving
industry standards. To compete successfully, we must design, develop,
manufacture and sell new or enhanced products that provide increasingly higher
levels of performance and reliability. However, we may not be able to
successfully develop or introduce these products, if our products:
- are not cost effective,
- are not brought to market in a timely manner,
- are not in accordance with evolving industry standards and
architectures, or
- fail to achieve market acceptance.
In addition, to successfully develop and market our planned products for
digital applications, we will be required to retain and attract new personnel
with experience and expertise in the digital arena.
-9-
<PAGE> 12
Competition for qualified personnel is intense. We may not be successful in
retaining and attracting qualified personnel.
Also, to successfully develop and market certain of our planned products
for digital applications, we may be required to enter into technology
development or licensing agreements with third parties. We cannot assure you
that we will be able to enter into any necessary technology development or
licensing agreement on terms acceptable to us, or at all. The failure to enter
into technology development or licensing agreements when necessary could limit
our ability to develop and market new products and, accordingly, could
materially and adversely affect our business and operating results.
WE NEED TO EFFECTIVELY MANAGE OUR GROWTH.
The growth in our business has placed, and is expected to continue to
place, a significant strain on our personnel, management and other resources.
Our ability to manage any future growth effectively will require us to attract,
train, motivate and manage new employees successfully, to integrate new
employees into our overall operations, to retain key employees and to continue
to improve our operational, financial and management systems. If we fail to
manage our future growth effectively, our business could suffer.
COMPETITION FOR QUALIFIED PERSONNEL IS INTENSE, AND WE MAY NOT BE SUCCESSFUL IN
ATTRACTING AND RETAINING PERSONNEL.
Our future success will depend, to a significant extent, on the ability
of our management to operate effectively, both individually and as a group. We
are dependent on our ability to retain and motivate high caliber personnel, in
addition to attracting new personnel. Competition for qualified technical and
other personnel is intense, particularly in the San Francisco Bay Area and
Israel, and we may not be successful in attracting and retaining such personnel.
Competitors and others have in the past and may in the future attempt to
recruit our employees. While our employees are required to sign standard
agreements concerning confidentiality and ownership of inventions, we generally
do not have employment contracts or noncompetition agreements with any of our
personnel. The loss of the services of any of our key personnel, the inability
to attract or retain qualified personnel in the future or delays in hiring
required personnel, particularly engineers and other technical personnel, could
negatively affect our business.
THE C-CUBE MERGER HAS RESULTED IN THE RECORDING OF SUBSTANTIAL GOODWILL AND
OTHER INTANGIBLE ASSETS AND REPORTING OF SUBSTANTIAL NET LOSSES WITHOUT ANY
CORRESPONDING TAX DEDUCTION.
Goodwill and other intangible assets of approximately $1.7 billion were
recorded in connection with the merger as disclosed in Note 7 to the unaudited
Condensed Consolidated Financial Statements for the three months ended June 30,
2000. Goodwill and intangibles are being amortized over 5 years, and this
amortization is expected to result in substantial net losses over the
amortization period. The amortization of goodwill and intangibles are not
deductible for tax purposes which will result in a provision for income taxes
despite a substantial reported net loss.
WE ARE LIABLE FOR C-CUBE'S PRE-MERGER TAX LIABILITIES, INCLUDING TAX LIABILITIES
RESULTING FROM THE SPIN-OFF OF ITS SEMICONDUCTOR BUSINESS.
The spin-off of C-Cube's semiconductor business gave rise to a
significant tax liability of approximately $320 million based on a valuation of
the semiconductor business of $1.1 billion. This liability is payable on or
before August 15, 2000. C-Cube determined the valuation by using the volume
weighted
-10-
<PAGE> 13
average price on May 3, 2000, the first trading day following the spin-off,
which resulted in a share price of $21.74. Under state law, Harmonic generally
is liable for all of C-Cube's debts, including C-Cube's liability for taxes
resulting from the spin-off. C-Cube retained and transferred to Harmonic in the
merger an amount of cash and other consideration sufficient to pay this
liability as well as all other tax liabilities of C-Cube and its subsidiaries
for periods prior to the merger. Harmonic will also be indemnified by the
spun-off semiconductor business if the cash reserves are not sufficient to
satisfy all of C-Cube's tax liabilities for periods prior to the merger. If for
any reason, the spun-off semiconductor business does not have sufficient cash to
pay such taxes, or if there are additional taxes due with respect to the
non-semiconductor business, Harmonic generally will remain liable, and such
liability could have a material adverse effect on Harmonic.
DUE TO THE STRUCTURE OF THE MERGER TRANSACTION, HARMONIC IS LIABLE FOR C-CUBE'S
GENERAL PRE-MERGER LIABILITIES AND ANY LIABILITIES RELATING TO C-CUBE'S
SEMICONDUCTOR BUSINESS FOR WHICH THE SPUN-OFF SEMICONDUCTOR BUSINESS IS UNABLE
TO INDEMNIFY HARMONIC.
The merger of C-Cube into Harmonic, with Harmonic as the surviving
entity, resulted in our assuming all of the liabilities of C-Cube at the time of
the merger. Pursuant to the merger agreement, Harmonic is indemnified by the
spun-off semiconductor business for liabilities associated with C-Cube's
historic semiconductor business. However, if the spun-off semiconductor business
is unable to fulfill its indemnification obligations to Harmonic or if general
liability claims not specifically associated with C-Cube's historic
semiconductor business are asserted, we would have to assume such obligations.
Those obligations could have a material adverse effect on us.
WE MAY BE SUBJECT TO RISKS ASSOCIATED WITH OTHER ACQUISITIONS.
We have made and may make investments in complementary companies,
products or technologies. If we make acquisitions, we could have difficulty
assimilating or retaining the acquired companies' personnel and operations or
integrating the acquired technology or products into ours. These difficulties
could disrupt our ongoing business, distract our management and employees and
increase our expenses. Moreover, our profitability may suffer because of
acquisition-related costs or amortization costs for acquired goodwill and other
intangible assets. Furthermore, we may have to incur debt or issue equity
securities to pay for any future acquisitions, the issuance of which could be
dilutive to our existing shareholders. If we are unable to successfully address
any of these risks, our business, financial condition and operating results
could be harmed.
DIFFICULTIES IN THE DEVELOPMENT AND PRODUCTION OF VIDEO ENCODING CHIPS BY
C-CUBE'S SPUN-OFF SEMICONDUCTOR BUSINESS MAY ADVERSELY IMPACT US.
The DiviCom business and C-Cube semiconductor business collaborated on
the production and development of two video encoding microelectronic chips prior
to the merger. In connection with the merger, Harmonic and the spun-off
semiconductor business entered into a contractual relationship under which
Harmonic will have access to certain of the spun-off semiconductor business
technologies and products which the DiviCom business previously depended on for
its product and service offerings. However, under the contractual relationships
between Harmonic and the spun-off semiconductor business, the semiconductor
business does not have a firm commitment to continue the development of video
encoding microelectronic chips. As a result, the semiconductor business may
choose not to continue future development of the chips for any reason. The
semiconductor business may also encounter in the future technological
difficulties in the production and development of the chips. If the spun-off
semiconductor business is not able to or does not sustain its development and
production efforts in this area, we may not be able to fully recognize the
benefits of the acquisition. See "Supply, License and Development Agreement" at
page 60 of the joint proxy
-11-
<PAGE> 14
statement filed with the Securities and Exchange Commission on March 23, 2000,
for further details of Harmonic's business relationship with the spun-off
semiconductor business after the merger.
IF SALES FORECASTED FOR A PARTICULAR PERIOD ARE NOT REALIZED IN THAT PERIOD DUE
TO THE UNPREDICTABLE SALES CYCLES OF OUR PRODUCTS, OUR OPERATING RESULTS FOR
THAT PERIOD WILL BE HARMED.
The sales cycles of many of our products, particularly our newer
products and products sold internationally, are typically unpredictable and
usually involve:
- a significant technical evaluation;
- a commitment of capital and other resources by cable, satellite,
and other network operators;
- delays associated with cable, satellite, and other network
operators' internal procedures to approve large capital
expenditures;
- time required to engineer the deployment of new technologies or
services within broadband networks; and
- testing and acceptance of new technologies that affect key
operations.
For these and other reasons, our sales cycles generally last three to
six months, but can last up to 12 months. If orders forecasted for a specific
customer for a particular quarter do not occur in that quarter, our operating
results for that quarter could be substantially lower than anticipated.
As a result of the merger, a significant portion of our revenue will be
derived from solutions contracts. A substantial part of the CS Division's
revenues are from solutions contracts which include a combination of product
sales as well as design, installation and integration services. Revenue
forecasts are based on estimated timing of the systems design, installation and
integration. Because the solutions contracts on the average span three quarters,
the timing of revenue is difficult to predict and could result in lower than
expected revenue in any particular quarter.
OUR FAILURE TO ADEQUATELY PROTECT OUR PROPRIETARY RIGHTS MAY ADVERSELY AFFECT
US.
We currently hold 29 issued United States patents and 9 issued foreign
patents, and have a number of patent applications pending. Although we attempt
to protect our intellectual property rights through patents, trademarks,
copyrights, licensing arrangements, maintaining certain technology as trade
secrets and other measures, we cannot assure you that any patent, trademark,
copyright or other intellectual property rights owned by us will not be
invalidated, circumvented or challenged, that such intellectual property rights
will provide competitive advantages to us or that any of our pending or future
patent applications will be issued with the scope of the claims sought by us, if
at all. We cannot assure you that others will not develop technologies that are
similar or superior to our technology, duplicate our technology or design around
the patents that we own. In addition, effective patent, copyright and trade
secret protection may be unavailable or limited in certain foreign countries in
which we do business or may do business in the future.
We believe that the future success of our business will depend on our
ability to translate the technological expertise and innovation of our personnel
into new and enhanced products. We generally enter into confidentiality or
license agreements with our employees, consultants, vendors and customers as
needed, and generally limit access to and distribution of our proprietary
information. Nevertheless, we cannot assure you that the steps taken by us will
prevent misappropriation of our technology. In addition, we have taken in
-12-
<PAGE> 15
the past, and may take in the future, legal action to enforce our patents and
other intellectual property rights, to protect our trade secrets, to determine
the validity and scope of the proprietary rights of others, or to defend against
claims of infringement or invalidity. Such litigation could result in
substantial costs and diversion of resources and could harm our business and
operating results.
In order to successfully develop and market certain of our planned
products for digital applications, we may be required to enter into technology
development or licensing agreements with third parties. Although many companies
are often willing to enter into such technology development or licensing
agreements, we cannot assure you that such agreements will be negotiated on
terms acceptable to us, or at all. The failure to enter into technology
development or licensing agreements, when necessary, could limit our ability to
develop and market new products and could cause our business to suffer.
As is common in our industry, we have from time to time received
notification from other companies of intellectual property rights held by those
companies upon which our products may infringe. Any claim or litigation, with or
without merit, could be costly, time consuming and could result in a diversion
of management's attention, which could harm our business. If we were found to be
infringing on the intellectual property rights of any third party, we could be
subject to liabilities for such infringement, which could be material, and could
be required to seek licenses from other companies or to refrain from using,
manufacturing or selling certain products or using certain processes. Although
holders of patents and other intellectual property rights often offer licenses
to their patent or other intellectual property rights, we cannot assure you that
licenses would be offered, that the terms of any offered license would be
acceptable to us or that failure to obtain a license would not cause our
operating results to suffer.
WE PURCHASE SEVERAL KEY COMPONENTS, SUBASSEMBLIES AND MODULES USED IN THE
MANUFACTURE OR INTEGRATION OF OUR PRODUCTS FROM SOLE OR LIMITED SOURCES, AND WE
ARE INCREASINGLY DEPENDENT ON CONTRACT MANUFACTURERS.
Many components, subassemblies and modules necessary for the manufacture
or integration of our products are obtained from a sole supplier or a limited
group of suppliers. Our reliance on sole or limited suppliers, particularly
foreign suppliers, and our increasing reliance on subcontractors involves
several risks, including a potential inability to obtain an adequate supply of
required components, subassemblies or modules and reduced control over pricing,
quality and timely delivery of components, subassemblies or modules. In
particular, certain optical components have been recently in short supply and
are available only from a small number of suppliers, including sole source
suppliers. While we expend considerable efforts to qualify additional optical
component sources, consolidation of suppliers in the industry (including the
acquisition of Etek Dynamics and the proposed acquisition of SDL Inc. by JDS
Uniphase) and the small number of viable alternatives have limited the results
of these efforts. Certain key elements of our digital headend products are
provided by a sole foreign supplier. We do not generally maintain long-term
agreements with any of our suppliers or subcontractors. An inability to obtain
adequate deliveries or any other circumstance that would require us to seek
alternative sources of supply could affect our ability to ship our products on a
timely basis, which could damage relationships with current and prospective
customers and harm our business. We attempt to limit this risk by maintaining
safety stocks of these components, subassemblies and modules. As a result of
this investment in inventories, we may be subject to an increasing risk of
inventory obsolescence in the future, which could harm our business.
WE MAY NEED ADDITIONAL CAPITAL IN THE FUTURE AND MAY NOT BE ABLE TO SECURE
ADEQUATE FUNDS ON TERMS ACCEPTABLE TO US.
We currently anticipate that our existing cash balances including cash
received pursuant to the merger, and available line of credit and cash flow
expected to be generated from future operations will be
-13-
<PAGE> 16
sufficient to meet our liquidity needs for at least the next twelve months.
However, we may need to raise additional funds if our estimates change or prove
inaccurate or in order for us to respond to unforeseen technological or
marketing hurdles or to take advantage of unanticipated opportunities.
In addition, we expect to review other potential acquisitions that would
complement our existing product offerings or enhance our technical capabilities.
While we have no other current agreements or negotiations underway with respect
to any potential acquisition, any future transaction of this nature could
require potentially significant amounts of capital. Funds may not be available
at the time or times needed, or available on terms acceptable to us. If adequate
funds are not available, or are not available on acceptable terms, we may not be
able to take advantage of market opportunities, to develop new products or to
otherwise respond to competitive pressures.
WE FACE RISKS ASSOCIATED WITH HAVING IMPORTANT FACILITIES AND RESOURCES LOCATED
IN ISRAEL.
Harmonic maintains two facilities in the State of Israel with a total of
approximately 90 employees. The personnel at these facilities represent a
significant portion of our research and development operations. Accordingly, we
are directly influenced by the political, economic and military conditions
affecting Israel, and any major hostilities involving Israel or the interruption
or curtailment of trade between Israel and its present trading partners could
significantly harm our business.
In addition, most of our employees in Israel are currently obligated to
perform annual reserve duty in the Israel Defense Forces and are subject to
being called for active military duty at any time. We cannot predict the effect
of these obligations on Harmonic in the future.
SECURITIES CLASS ACTION CLAIMS
On June 28, 2000, a securities class action captioned Smith v. Harmonic
Inc., Et. Al., Civil Action No. C-00-2287-PJH was filed against Harmonic and
several of its officers and directors in the United States District Court for
the Northern District of California. Additional actions containing similar
allegation have since been filed. These complaints allege violations of the
federal securities laws, specifically Section 10(b) of the Securities Exchange
Act of 1934, and seek unspecified damages on behalf of a purported class of
purchasers of Harmonic common stock during the period from March 27, 2000
through June 26, 2000. The various actions have not yet been consolidated and no
trial date has been scheduled.
On June 29, 2000, a securities class action captioned Krim v. Harmonic
Inc., Et. Al., Civil Action No. CV 790816 was filed against Harmonic and several
of its officers and directors in the California Superior Court for the County of
Santa Clara. The complaint alleges violations of the federal securities laws,
specifically Section 11 of the Securities Act of 1933, and seeks unspecified
damages on behalf of a purported class of persons who acquired Harmonic common
stock pursuant to a Form S-4 Registration Statement filed March 23, 2000,
concerning a transaction completed on May 3, 2000. On July 26, 2000, the action
was removed to the United States District Court for the Northern District of
California. No trial date has been scheduled.
While the Company believes these class actions to be without merit and
is vigorously defending against them, there can be no assurance that the Company
will prevail. An unfavorable outcome of this litigation could have a material
adverse effect on the Company's consolidated financial position, liquidity or
results of operations.
-14-
<PAGE> 17
OUR STOCK PRICE MAY BE VOLATILE.
The market price of our common stock has fluctuated in the past and is
likely to fluctuate in the future. In addition, the securities markets have
experienced significant price and volume fluctuations and the market prices of
the securities of technology companies have been especially volatile. Investors
may be unable to resell their shares of our common stock at or above their
purchase price. In the past, companies that have experienced volatility in the
market price of their stock have been the object of securities class action
litigation.
We are currently the object of securities class action litigation, and
this could result in substantial costs and a diversion of management's attention
and resources.
While the Company believes these class actions to be without merit and
is vigorously defending against them, there can be no assurance that the Company
will prevail. An unfavorable outcome of this litigation could have a material
adverse effect on the Company's consolidated financial position, liquidity or
results of operations.
OUR CERTIFICATE OF INCORPORATION AND BYLAWS AND DELAWARE LAW CONTAIN PROVISIONS
THAT COULD DISCOURAGE A TAKEOVER.
Provisions of our Amended and Restated Certificate of Incorporation,
Bylaws, and Delaware law could make it more difficult for a third party to
acquire us, even if doing so would be beneficial to our stockholders.
-15-
<PAGE> 18
USE OF PROCEEDS
Harmonic will not receive any of the proceeds from the sale of the
shares offered by this prospectus. All proceeds from the sale of the shares
offered hereby will be for the account of the selling stockholders, as described
below. See "Selling Stockholders" and "Plan of Distribution."
SELLING STOCKHOLDERS
The following table sets forth as of the date of this prospectus, the
name of each of the selling stockholders, the number of shares of Common Stock
that each selling stockholder owns, the number of shares of Common Stock owned
by each selling stockholder that may be offered for sale from time to time by
this prospectus, and the number of shares of Common Stock to be held by each
selling stockholder assuming the sale of all the Common Stock offered hereby.
Some of the selling stockholders may distribute their shares, from time
to time, to their limited and/or general partners, who may sell shares pursuant
to this prospectus. Each selling shareholder may also transfer shares owned by
him by gift, and upon any such transfer the donee would have the same right of
sale as the selling stockholder.
The shares being offered by the selling stockholders were acquired in
connection with our acquisition of all of the capital stock of Cogent
Technology, Inc., a Delaware corporation, on July 1, 2000. We may amend or
supplement this prospectus from time to time to update the disclosure set forth
herein.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
SHARES BENEFICIALLY OWNED NUMBER OF SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING (1) SHARES BEING AFTER OFFERING(1)
----------------------------------------------------------------------------------------------------------------------------------
NAME OF SELLING STOCKHOLDER NUMBER PERCENT OFFERED NUMBER PERCENT
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dave Arnold ......................................... 10,842 * 10,842 10,842 *
----------------------------------------------------------------------------------------------------------------------------------
Greg Baker .......................................... 19,173 * 19,173 19,173 *
----------------------------------------------------------------------------------------------------------------------------------
Phil Beekman ........................................ 34,507 * 34,507 34,507 *
----------------------------------------------------------------------------------------------------------------------------------
Rob Carpenter ....................................... 6,899 * 6,899 6,899 *
----------------------------------------------------------------------------------------------------------------------------------
Robert Clasen ....................................... 493 * 493 493 *
----------------------------------------------------------------------------------------------------------------------------------
Michael Collette .................................... 5,234 * 5,234 5,234 *
----------------------------------------------------------------------------------------------------------------------------------
Ron Donati .......................................... 34,745 * 34,745 34,745 *
----------------------------------------------------------------------------------------------------------------------------------
Chin Wei Fan ........................................ 119 * 119 119 *
----------------------------------------------------------------------------------------------------------------------------------
Michael E. Filice, Jr ............................... 1,194 * 1,194 1,194 *
----------------------------------------------------------------------------------------------------------------------------------
Michael E. Filice, Sr., as Trustee of the
Filice Living Trust dated 6-11-96 ................ 1,194 * 1,194 1,194 *
----------------------------------------------------------------------------------------------------------------------------------
Richard Fuller ...................................... 115 * 115 115 *
----------------------------------------------------------------------------------------------------------------------------------
Donald A. Gaubatz ................................... 2,146 * 2,146 2,146 *
----------------------------------------------------------------------------------------------------------------------------------
Donald A. Gaubatz and Linda Kroll ................... 2,529 * 2,529 2,529 *
----------------------------------------------------------------------------------------------------------------------------------
Van Thanh and Denise Hua, as Trustees of
the Hua Family Trust ............................. 2,111 * 2,111 2,111 *
----------------------------------------------------------------------------------------------------------------------------------
John Kau ............................................ 11,335 * 11,335 11,335 *
----------------------------------------------------------------------------------------------------------------------------------
William Mears ....................................... 45,191 * 45,191 45,191 *
----------------------------------------------------------------------------------------------------------------------------------
David Osborne ....................................... 10,160 * 10,160 10,160 *
----------------------------------------------------------------------------------------------------------------------------------
Elizabeth Picco ..................................... 22,522 * 22,522 22,522 *
----------------------------------------------------------------------------------------------------------------------------------
Marty Picco ......................................... 22,670 * 22,670 22,670 *
----------------------------------------------------------------------------------------------------------------------------------
Julie Reynolds ...................................... 821 * 821 821 *
----------------------------------------------------------------------------------------------------------------------------------
Steve Rose .......................................... 867 * 867 867 *
----------------------------------------------------------------------------------------------------------------------------------
Jim Summers ......................................... 2,236 * 2,236 2,236 *
----------------------------------------------------------------------------------------------------------------------------------
Jim and Cynthia Summers, as Trustees for
the Jim A. Summers and Cynthia B
Summers Living Trust 7-1-89 ...................... 34,499 * 34,499 34,499 *
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-16-
<PAGE> 19
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
SHARES BENEFICIALLY OWNED NUMBER OF SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING (1) SHARES BEING AFTER OFFERING(1)
----------------------------------------------------------------------------------------------------------------------------------
NAME OF SELLING STOCKHOLDER NUMBER PERCENT OFFERED NUMBER PERCENT
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Harry and Sue Tredennick ............................ 2,534 * 2,534 2,534 *
----------------------------------------------------------------------------------------------------------------------------------
Nick Tredennick, Ph.D ............................... 246 * 246 246 *
----------------------------------------------------------------------------------------------------------------------------------
David and Nancy Wang, as Trustees of the
David and Nancy Wang Trust ....................... 2,111 * 2,111 2,111 *
----------------------------------------------------------------------------------------------------------------------------------
Mei Wang ............................................ 119 * 119 119 *
----------------------------------------------------------------------------------------------------------------------------------
Michael P. Wang ..................................... 4,861 * 4,861 4,861 *
----------------------------------------------------------------------------------------------------------------------------------
Yangbin Wang ........................................ 4,535 * 4,535 4,535 *
----------------------------------------------------------------------------------------------------------------------------------
Stephen M. Wurzburg ................................. 115 * 115 115 *
----------------------------------------------------------------------------------------------------------------------------------
Total ............................................ 286,123 * 286,123 286,123 *
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
----------------------
* Less than 1%.
(1) Based on 57,310,809 shares outstanding as of June 30, 2000.
-17-
<PAGE> 20
PLAN OF DISTRIBUTION
The shares covered by this prospectus may be offered and sold from time
to time by the selling stockholders. The selling stockholders will act
independently of Harmonic in making decisions with respect to the timing, manner
and size of each sale. The selling stockholders may sell the shares being
offered hereby on the Nasdaq National Market, or otherwise, at prices and under
terms then prevailing or at prices related to the then current market price, at
varying prices or at negotiated prices. The shares offered hereby may be sold,
without limitation, by one or more of the following means of distribution: (a) a
block trade in which the broker-dealer so engaged will attempt to sell such
shares as agent, but may position and resell a portion of the block as principal
to facilitate the transaction; (b) purchases by a broker-dealer as principal and
resale by such broker-dealer for its own account pursuant to this prospectus;
(c) an over-the-counter distribution in accordance with the rules of the Nasdaq
National Market; (d) ordinary brokerage transactions and transactions in which
the broker solicits purchasers; and (e) in privately negotiated transactions. To
the extent required, this prospectus may be amended and supplemented from time
to time to describe a specific plan of distribution.
In connection with distributions of the shares offered hereby or
otherwise, the selling stockholders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with such
transactions, broker-dealers or other financial institutions may engage in short
sales of Harmonic's common stock in the course of hedging the positions they
assume with selling stockholders. The selling stockholders may also sell
Harmonic's common stock short and deliver the shares offered hereby to close out
such short positions. The selling stockholders may also enter into option or
other transactions with broker-dealers or other financial institutions which
require the delivery to such broker-dealer or other financial institution of
shares offered hereby, which shares such broker-dealer or other financial
institution may resell pursuant to this prospectus (as supplemented or amended
to reflect such transaction). The selling stockholders may also pledge the
shares offered hereby to a broker-dealer or other financial institution, and,
upon a default, such broker-dealer or other financial institution, may effect
sales of the pledged shares pursuant to this prospectus (as supplemented or
amended to reflect such transaction). In addition, any shares offered hereby
that qualify for sale pursuant to Rule 144 may, at the option of the holder
thereof, be sold under Rule 144 rather than pursuant to this prospectus.
Any broker-dealer participating in such transactions as agent may
receive commissions from the selling stockholder and/or purchasers of the shares
offered hereby (and, if it acts as agent for the purchaser of such shares, from
such purchaser). Usual and customary brokerage fees will be paid by the selling
stockholder. Broker-dealers may agree with the selling stockholder to sell a
specified number of shares at a stipulated price per share, and, to the extent
such a broker-dealer is unable to do so acting as agent for the selling
stockholder, to purchase as principal any unsold shares at the price required to
fulfill the broker-dealer commitment to the selling stockholder. Broker-dealers
who acquire shares as principal may thereafter resell such shares from time to
time in transactions (which may involve cross and block transactions and which
may involve sales to and through other broker-dealers, including transactions of
the nature described above) in the over-the-counter market, in negotiated
transactions or otherwise at market prices prevailing at the time of sale or at
negotiated prices, and in connection with such resales, may pay to or receive
from the purchasers of such shares commissions computed as described above.
To comply with the securities laws of certain states, if applicable, the
shares offered hereby will be sold in such jurisdictions only through registered
or licensed brokers or dealers. In addition, in certain states the shares
offered hereby may not be sold unless they have been registered or qualified for
sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
-18-
<PAGE> 21
We have advised the selling stockholders that the anti-manipulation
rules of Regulation M under the Exchange Act may apply to sales of the shares
offered hereby in the market and to the activities of the selling stockholders
and their affiliates. In addition, we will make copies of this prospectus
available to the selling stockholders and have informed them of the need for
delivery of copies of this prospectus to purchasers at or prior to the time of
any sale of the shares offered hereby. The selling stockholders may indemnify
any broker-dealer than participates in transactions involving the sale of the
shares against certain liabilities, including liabilities arising under the
Securities Act.
Some of the selling stockholders may distribute their shares, from time
to time, to their limited and/or general partners, who may sell shares pursuant
to this prospectus. Each selling shareholder may also transfer shares owned by
him by gift, and upon any such transfer the donee would have the same right of
sale as the selling stockholder.
At the time a particular offer of shares is made, if required, a
prospectus supplement will be distributed that will set forth the number of
shares being offered and the terms of the offering, including the name of any
underwriter, dealer or agent, the purchase price paid by any underwriter, any
discount, commission and other item constituting compensation, any discount,
commission or concession allowed or reallowed or paid to any dealer, and the
proposed selling price to the public.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Bylaws limits the liability of our directors and officers for
expenses to the maximum extent permitted by Delaware law. Delaware law provides
that directors of a corporation will not be personally liable for monetary
damages for breach of their fiduciary duties as directors, except for liability
(i) for any breach of their duty of loyalty to the corporation or its
stockholders; (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law; (iii) for unlawful
payments of dividends or unlawful stock repurchases or redemptions as provided
in Section 174 of the Delaware General Corporation Law; or (iv) for any
transaction from which the director derived an improper personal benefit.
Our Certificate of Incorporation provides that we must indemnify our
directors and may indemnify our other officers, employees and agents to the
fullest extent permitted by law.
We have entered into agreements to indemnify our directors and officers,
in addition to indemnification provided for in our Bylaws. These agreements,
among other things, indemnify our directors and officers for certain expenses
(including attorneys' fees), judgments, fines and settlement amounts incurred by
any such person in any action or proceeding, including any action by or in the
right of Harmonic, arising out of such person's services as a Harmonic director
or officer, any subsidiary of Harmonic or any other company or enterprise to
which the person provides services at our request.
Harmonic's Bylaws also permit us to secure insurance on behalf of any
officer, director, employee or other agent for any liability arising out of his
or her actions in such capacity, regardless of whether the Bylaws would permit
indemnification. We also maintain an insurance policy insuring our directors and
officers against liability for certain acts and omissions while acting in their
official capacities.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling
Harmonic pursuant to the foregoing provisions, we have been informed that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is therefore unenforceable.
-19-
<PAGE> 22
LEGAL MATTERS
Certain legal matters relating to the validity of the securities offered
hereby will be passed upon for Harmonic by Wilson Sonsini Goodrich & Rosati,
Professional Corporation, Palo Alto, California.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Annual Report on Form 10-K of Harmonic Inc. for the year ended December 31,
1999 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The consolidated statements of net investment of the DiviCom business
("DiviCom" or the "Company"), (an operating unit of C-Cube Microsystems Inc.),
as of December 31, 1998 and December 31, 1999, and the related consolidated
income statements, statements of changes in net investment and cash flows for
each of the three years in the period ended December 31, 1999, which have been
incorporated by reference in this registration statement of Harmonic Inc. on
Form S-3, have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their audit report appearing in the Form 8-K/A of Harmonic Inc. dated
July 17, 2000, and are so incorporated by reference in reliance upon the report
of such firm given upon their authority as experts in accounting and auditing.
-20-
<PAGE> 23
================================================================================
PROSPECTIVE INVESTORS MAY RELY ONLY ON THE INFORMATION CONTAINED IN THIS
PROSPECTUS. NEITHER HARMONIC NOR ANY SELLING STOCKHOLDER HAS AUTHORIZED ANYONE
TO PROVIDE PROSPECTIVE INVESTORS WITH INFORMATION DIFFERENT FROM THAT CONTAINED
IN THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT SEEKING AN
OFFER TO BUY THE SHARES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT
PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT ONLY AS OF
THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF THE DELIVERY OF THIS
PROSPECTUS OR ANY SALE OF THE SHARES.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Where You Can Find More Information .................... 1
Forward-Looking Statements ............................. 3
Risk Factors ........................................... 4
Use of Proceeds ........................................ 16
Selling Stockholders.................................... 16
Plan of Distribution.................................... 18
Indemnification of Directors and Officers............... 19
Legal Matters........................................... 20
Experts................................................. 20
</TABLE>
286,123 SHARES
HARMONIC INC.
COMMON STOCK
-------------
PROSPECTUS
-------------
__________ ___, 2000
================================================================================
<PAGE> 24
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. EXPENSES OF ISSUANCE AND DISTRIBUTION
The Company will pay all expenses incident to the offering and sale to
the public of the shares being registered other than any commissions and
discounts of underwriters, dealers or agents and any transfer taxes. Such
expenses are set forth in the following table. All of the amounts shown are
estimates except for the Securities and Exchange Commission ("SEC") registration
fee and the Nasdaq Stock Market listing fee.
<TABLE>
<CAPTION>
<S> <C>
SEC Registration Fee .................... $ 2,141.00
Accounting fees and expenses ............ 5,000.00
Legal fees and expenses ................. 5,000.00
Nasdaq Stock Market listing fee ......... 2,861.00
Miscellaneous ........................... 5,000.00
----------
Total ................................ $20,002.00
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Bylaws limits the liability of our directors and officers for
expenses to the maximum extent permitted by Delaware law. Delaware law provides
that directors of a corporation will not be personally liable for monetary
damages for breach of their fiduciary duties as directors, except for liability
(i) for any breach of their duty of loyalty to the corporation or its
stockholders; (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law; (iii) for unlawful
payments of dividends or unlawful stock repurchases or redemptions as provided
in Section 174 of the Delaware General Corporation Law; or (iv) for any
transaction from which the director derived an improper personal benefit.
Our Certificate of Incorporation provides that we must indemnify our
directors and may indemnify our other officers, employees and agents to the
fullest extent permitted by law.
We have entered into agreements to indemnify our directors and officers,
in addition to indemnification provided for in our Bylaws. These agreements,
among other things, indemnify our directors and officers for certain expenses
(including attorneys' fees), judgments, fines and settlement amounts incurred by
any such person in any action or proceeding, including any action by or in the
right of Harmonic, arising out of such person's services as a Harmonic director
or officer, any subsidiary of Harmonic or any other company or enterprise to
which the person provides services at our request.
Harmonic's Bylaws also permit us to secure insurance on behalf of any
officer, director, employee or other agent for any liability arising out of his
or her actions in such capacity, regardless of whether the Bylaws would permit
indemnification. We also maintain an insurance policy insuring our directors and
officers against liability for certain acts and omissions while acting in their
official capacities.
II-1
<PAGE> 25
ITEM 16. EXHIBITS
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation
23.1 Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (included in Exhibit 5.1)
23.2 Consent of PricewaterhouseCoopers LLP, independent accountants
23.3 Consent of Deloitte & Touche LLP, independent accountants
24.1 Power of Attorney (contained on Page II-4)
</TABLE>
ITEM 17. UNDERTAKINGS
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement: (i) to
include any prospectus required by Section 10(a)(3) of the Securities
Act; (ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) (Section 230.424(b) of this
chapter) if, the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement; and (iii) to include any material information
with respect to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information in the
Registration Statement; provided, however, that (i) and (ii) do not
apply if the Registration Statement is on Form S-3, Form S-8 or Form
F-3, and the information required to be included in a post-effective
amendment by (i) and (ii) is contained in periodic reports filed with or
furnished to the Commission by the Registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference in
the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
B. Undertaking Regarding Filings Incorporating Subsequent Exchange
Act Documents by Reference.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of
II-2
<PAGE> 26
the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. Undertaking Regarding Indemnification.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described in Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
D. Undertaking Regarding Registration Statement Permitted by Rule
430A.
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed
to be part of this Registration Statement as of the time it was declared
effective.
(2) For the purpose of determining liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
II-3
<PAGE> 27
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable cause to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Sunnyvale, State of California, on August 29, 2000.
HARMONIC INC.
By: /s/ ROBIN N. DICKSON
------------------------------------
Robin N. Dickson
Chief Financial Officer
(Principal Financial and Accounting Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Robin N. Dickson his attorney-in-fact,
with the power of substitution, for him in any and all capacities, to sign any
amendment to this Registration Statement on Form S-3, and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting to said attorney-in-fact full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of the Registrant on August 29, 2000.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ANTHONY J. LEY President and Chief Executive Officer August 29, 2000
----------------------------------- (Principal Executive Officer),
Anthony J. Ley Chairman of the Board of Directors
/s/ ROBIN N. DICKSON Chief Financial Officer (Principal August 29, 2000
----------------------------------- Financial and Reporting Officer)
Robin N. Dickson
/s/ BARRY LEMIEUX Director August 29, 2000
-----------------------------------
Barry Lemieux
/s/ E. FLOYD KVAMME Director August 29, 2000
-----------------------------------
E. Floyd Kvamme
/s/ DAVID A. LANE Director August 29, 2000
-----------------------------------
David A. Lane
/s/ MOSHE NAZARTHY Director August 29, 2000
-----------------------------------
Moshe Nazarthy
/s/ MICHEL L. VAILLAUD Director August 29, 2000
-----------------------------------
Michel L. Vaillaud
/s/ BARYN S. FUTA Director August 29, 2000
-----------------------------------
Baryn S. Futa
</TABLE>
II-4
<PAGE> 28
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation
23.1 Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (included in Exhibit 5.1)
23.2 Consent of PricewaterhouseCoopers LLP, independent accountants
23.3 Consent of Deloitte & Touche LLP, independent accountants
24.1 Power of Attorney (contained on Page II-4)
</TABLE>
