HARMONIC INC.

Previous wording

As previously reported, on December 8, 2025, we entered into a Put Option Agreement to sell our Video business to Leone Media Inc. (d/b/a MediaKind) (the “Buyer”) for a purchase price of $145 million in cash. On March 20, 2026, we executed the APA to complete the transaction. On June 16, 2026, we completed the sale of our Video business to the Buyer pursuant to the APA. Proceeds from the sale were $137.9 million paid at closing, subject to final adjustment under the terms of the APA. The results of the Video business are presented as discontinued operations in the accompanying unaudited condensed consolidated statements of operations for all periods presented. The assets and liabilities of the Video business have been reflected as assets and liabilities of discontinued operations in the accompanying unaudited condensed consolidated balance sheet for all prior periods presented.

Current wording

As previously reported, on December 8, 2025, we entered into a Put Option Agreement to sell our Video business to Leone Media Inc. (d/b/a MediaKind) (the “Buyer”) for a purchase price of $145 million in cash. On March 20, 2026, we executed the Asset Purchase Agreement ("APA") to complete the transaction. On June 16, 2026, we completed the sale of our Video business to the Buyer pursuant to the APA. Proceeds from the sale were $137.9 million paid at closing, subject to final adjustment under the terms of the APA. The results of the Video business are presented as discontinued operations in the accompanying unaudited condensed consolidated statements of operations for all periods presented. The assets and liabilities of the Video business have been reflected as assets and liabilities of discontinued operations in the accompanying unaudited condensed consolidated balance sheet for all prior periods presented. The Company and Buyer are in the process of finalizing the post-closing adjustments, which are currently expected to be completed in the first quarter of 2027.

Previous wording

Our critical accounting estimates are disclosed in our 2025 Annual Report on Form 10-K, as filed with the SEC on February 24, 2026. There have been no significant changes to these estimates during the six months ended July 3, 2026.

Current wording

Our critical accounting estimates are disclosed in our 2025 Annual Report on Form 10-K, as filed with the SEC on February 24, 2026. There have been no significant changes to these estimates during the nine months ended October 2, 2026.

Previous wording

Our gross margin improved by 660 basis points and 210 basis points in the three- and six-months periods ended July 3, 2026, respectively, compared to the corresponding periods in 2025, primarily due to a favorable product mix associated with a higher percentage of new deployments in North America.

Current wording

Our gross margin improved by 510 basis points and 310 basis points in the three- and nine-months periods ended October 2, 2026, respectively, compared to the corresponding periods in 2025, primarily due to a favorable product mix associated with increased customer deployments in North America.

Previous wording

Research and development expenses increased by $3.2 million, and $4.4 million, for the three- and six-month periods ended July 3, 2026, respectively, compared to the corresponding period in 2025, mainly due to higher incentive compensation and increased investment to support business growth.

Current wording

Research and development expenses increased by $4.9 million, and $9.3 million, for the three- and nine-month periods ended October 2, 2026, respectively, compared to the corresponding period in 2025, mainly due to higher incentive compensation and increased investment to support business growth. The three month increase also reflects approximately $2.0 million of engineering costs, now recorded in research and development expenses rather than cost of revenue, following the completion of a multi-year custom development project in the second quarter of 2026.

Previous wording

As discussed previously, the results of the Video business have been classified as discontinued operations for all periods presented. Certain indirect corporate costs, such as IT and facility costs, previously allocated to the Video reporting segment, do not qualify for discontinued operations accounting classification and are now reported within continuing operations. These stranded costs, which are included in research and development expenses, were $0.2 million and $0.3 million for the three months ended July 3, 2026, and the corresponding period in 2025, respectively. The stranded costs were $0.6 million and $1.1 million for the six months ended July 3, 2026 and the corresponding period in 2025, respectively.

Current wording

As discussed previously, the results of the Video business have been classified as discontinued operations for all periods presented. Certain indirect corporate costs, such as IT and facility costs, previously allocated to the Video reporting segment, do not qualify for discontinued operations accounting classification and are now reported within continuing operations. These stranded costs, which are included in research and development expenses, were $0.3 million and $0.6 million for the three months ended October 2, 2026, and the corresponding period in 2025, respectively. The stranded costs were $0.9 million and $1.7 million for the nine months ended October 2, 2026 and the corresponding period in 2025, respectively.

Previous wording

Selling, general and administrative expenses increased by $4.1 million, and $6.7 million, for the three- and six-month periods ended July 3, 2026, respectively, compared to the corresponding periods in 2025, primarily due to higher incentive compensation and increased investment to support business growth.

Current wording

Selling, general and administrative expenses increased by $8.6 million, and $15.3 million, for the three- and nine-month periods ended October 2, 2026, respectively, compared to the corresponding periods in 2025, primarily due to higher incentive compensation and increased investment to support business growth.

Previous wording

As discussed above, the stranded costs resulting from the disposition of the Video business included in selling, general and administrative expense were $1.9 million and $3.5 million for the three- and six-month periods ended July 3, 2026, respectively. The stranded costs were $1.1 million and $1.9 million for the corresponding periods in 2025.

Current wording

As discussed above, the stranded costs resulting from the disposition of the Video business included in selling, general and administrative expense were $1.0 million and $4.5 million for the three- and nine-month periods ended October 2, 2026, respectively. The stranded costs were $1.2 million and $3.1 million for the corresponding periods in 2025.

Previous wording

During the second quarter of fiscal year 2026, the Company recorded additional lease-related impairment and other charges of $0.4 million. The charges consisted of $0.1 million in right-of-use asset impairments and $0.3 million related to the fair value of other unrecoverable facility costs. These adjustments were driven by changes in underlying assumptions, including updated estimates of space utilization, sublease recoverability, and expected cost obligations.

Current wording

During the nine months ended October 2, 2026 the Company recorded additional lease-related impairment and other charges of $0.6 million, which consisted of $0.3 million in right-of-use asset impairments, and $0.3 million in leasehold improvement asset impairments. These adjustments were driven by changes in underlying assumptions, including updated estimates of space utilization, sublease recoverability, and expected cost obligations.

Previous wording

The changes in other income (expense), net, in the three and six months ended July 3, 2026 compared to the corresponding periods in 2025, was primarily due to fluctuations in the foreign currency exchange rate against the U.S. dollar.

Current wording

Other income (expense), net decreased by $1.0 million and increased by $0.2 million in the three and nine months ended October 2, 2026, respectively, compared to the corresponding periods in 2025, primarily due to fluctuations in foreign currency exchange rates against the U.S. dollar.

Previous wording

The provision for income taxes increased during the three months ended July 3, 2026, compared to the corresponding period in 2025, primarily due to pretax income in the current period, compared to the pretax loss in the prior period.

Current wording

The provision for income taxes increased by $3.7 million during the three months ended October 2, 2026, compared to the corresponding period in 2025, primarily due to higher pretax income in the current period.

Previous wording

The provision for income taxes increased during the six months ended July 3, 2026, compared to the corresponding period in 2025, primarily due to higher pretax income and $4.6 million of withholding taxes on the distribution from a foreign subsidiary in the current period.

Current wording

The provision for income taxes increased by $17.8 million during the nine months ended October 2, 2026, compared to the corresponding period in 2025, primarily due to higher pretax income and $4.6 million of withholding taxes on the distribution from a foreign subsidiary in the current period.

Previous wording

As of July 3, 2026, we had an outstanding principal amount equal to $110.8 million under our Credit Agreement, consisting of $75.0 million under our Revolving Facility and $35.8 million under our Term Facility, of which $3.0 million is scheduled to become due in the 12-month period following July 3, 2026. On July 7, we used cash on hand to repay in full the $75.0 million balance outstanding under our Revolving Facility. Refer to Note 13 on the Notes to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional details. As of July 3, 2026, our total minimum lease payments are $22.0 million, of which $6.5 million is due within 12 months of July 3, 2026.

Current wording

As of October 2, 2026, we had an outstanding principal amount equal to $35.0 million under our Credit Agreement, consisting of our Term Facility, of which $3.0 million is scheduled to become due in the 12-month period following October 2, 2026. On July 7, 2026, we used cash on hand to repay in full the $75.0 million balance outstanding under our Revolving Facility. As of October 2, 2026, our total minimum lease payments are $20.0 million, of which $5.7 million is due within 12 months of October 2, 2026.

Previous wording

In February 2025, the Board of Directors authorized us to repurchase, from time to time, up to $200 million of our outstanding shares of common stock through February 2028 (the “Share Repurchase Authorization”), at such time and such prices as management may decide. The program does not obligate us to repurchase any specific number of shares and may be discontinued at any time. As of July 3, 2026, approximately $78.0 million of the Share Repurchase Authorization remained available for repurchases under this program.

Current wording

In February 2025, the Board of Directors authorized us to repurchase, from time to time, up to $200 million of our outstanding shares of common stock through February 2028 (the “Share Repurchase Authorization”), at such time and such prices as management may decide. The program does not obligate us to repurchase any specific number of shares and may be discontinued at any time. As of October 2, 2026, approximately $74.4 million of the Share Repurchase Authorization remained available for repurchases under this program. Subsequent to October 2, 2026, and through October 21, 2026, we repurchased approximately 1.5 million shares of our common stock for an aggregate amount of $16.4 million pursuant to a 10b5-1 trading plan, after which approximately $58.0 million remained available under the Share Repurchase Authorization.

Previous wording

As of July 3, 2026, our principal sources of liquidity consisted of cash and cash equivalents of $231.9 million, net accounts receivable of $89.9 million, and $84.7 million remaining available under the Revolving Facility of our Credit Agreement.

Current wording

As of October 2, 2026, our principal sources of liquidity consisted of cash and cash equivalents of $142.8 million, net accounts receivable of $117.1 million, and $159.7 million remaining available under the Revolving Facility of our Credit Agreement.

Previous wording

Our cash and cash equivalents of $231.9 million as of July 3, 2026 consisted of bank deposits held throughout the world and money market funds, of which $49.7 million was held outside of the United States. At present, such foreign funds are considered to be indefinitely reinvested in foreign countries to the extent of indefinitely reinvested foreign earnings. In the event funds from foreign operations are needed to fund cash needs in the United States and if U.S. taxes have not already been previously accrued, we may be required to accrue and pay additional U.S. and foreign withholding taxes in order to repatriate these funds. As discussed above, we plan to use the proceeds from the sale of the Video business to support strategic growth initiatives and to further fund our share repurchase program. We do not expect the disposition of the Video business to have a material impact on our ongoing liquidity and capital resources.

Current wording

Our cash and cash equivalents of $142.8 million as of October 2, 2026 consisted of bank deposits held throughout the world and money market funds, of which $58.1 million was held outside of the United States. At present, such foreign funds are considered to be indefinitely reinvested in foreign countries to the extent of indefinitely reinvested foreign earnings. In the event funds from foreign operations are needed to fund cash needs in the United States and if U.S. taxes have not already been previously accrued, we may be required to accrue and pay additional U.S. and foreign withholding taxes in order to repatriate these funds. As discussed above, we plan to use the proceeds from the sale of the Video business to support strategic growth initiatives and to further fund our share repurchase program. We do not expect the disposition of the Video business to have a material impact on our ongoing liquidity and capital resources.

Previous wording

Net cash provided by investing activities increased by $134.6 million during the first six months of fiscal 2026, compared to the corresponding period in 2025, primarily due to cash proceeds received for the sale of the Video business in the current period.

Current wording

Net cash provided by investing activities increased by $132.7 million during the first nine months of fiscal 2026, compared to the corresponding period in 2025. The change was primarily due to cash proceeds from the sale of the Video business and lower capital expenditures in the current period, partially offset by cash paid for the acquisition of INT6, net of cash acquired.

Previous wording

Net cash used in financing activities decreased by $2.9 million during the first six months of fiscal 2026, compared to the corresponding period in fiscal 2025, primarily due to $7.2 million of lower stock repurchases in the current period, partially offset by a $3.8 million in proceeds from other loans in the prior period.

Current wording

Net cash used in financing activities increased by $60.8 million during the first nine months of fiscal 2026, compared to the corresponding period in fiscal 2025, primarily due to the repayment of the $75.0 million balance outstanding under our Revolving Facility, partially offset by a $19.2 million decrease in stock repurchases in the current period.

Previous wording

Net sales from discontinued operations were $39.5 million and $89.6 million for the three and six months ended July 3, 2026, respectively, compared to $51.1 million and $99.3 million for the prior year periods. The decreases in net sales during the current periods were primarily due to a shorter reporting period, as the sale of the Video business was completed on June 16, 2026, compared to a full quarter in 2025. The losses from discontinued operations, net of tax, for the three and six months ended July 3, 2026, respectively, was primarily attributable to the loss on disposal of the business, advisory fees and employee compensation costs related to the disposition of our Video business incurred in the current periods.

Current wording

Net sales from discontinued operations were nil and $89.6 million for the three and nine months ended October 2, 2026, respectively, compared to $51.9 million and $151.3 million for the prior year periods. The decreases in net sales during the current periods were primarily due to the completion of the sale of the Video business on June 16, 2026, for the nine months ended October 2, 2026. The losses from discontinued operations, net of tax, for the three and nine months ended October 2, 2026 were primarily attributable to the loss on disposal of the business, advisory fees and employee compensation costs related to the disposition of our Video business incurred in the current periods.