SELECTED QUARTERLY FINANCIAL DATA

(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The following table sets forth our unaudited quarterly Consolidated Statement of Operations data for each of the eight quarters ended December 31, 2018. In management’s opinion, the data has been prepared on the same basis as the audited Consolidated Financial Statements included in this report, and reflects all necessary adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of this data.



	Fiscal 2018
	1st Quarter			2nd Quarter			3rd Quarter			4th Quarter
	(In thousands, except per share amounts)
Quarterly Data:
Net revenue	$	90,127		$	99,160		$	100,616		$	113,655
Gross profit ⁽²⁾	47,183			51,603			50,102			60,321
Net income (loss) ^{(1) (3) (4)}	(13,694		)	(2,913		)	(7,758		)	3,330
Net income (loss) per share:
Basic and diluted	$	(0.16	)	$	(0.03	)	$	(0.09	)	$	0.04
Shares used in per share calculations:
Basic	83,912			85,304			86,321			86,846
Diluted	83,912			85,304			86,321			89,028
	Fiscal 2017
	1st Quarter			2nd Quarter			3rd Quarter			4th Quarter
	(In thousands, except per share amounts)
Quarterly Data:
Net revenue	$	82,943		$	82,315		$	92,014		$	100,974
Gross profit ⁽²⁾	40,408			33,815			47,025			48,572
Net loss ^{(1) (4)}	(24,027		)	(31,500		)	(15,583		)	(11,516		)
Net loss per share:
Basic and diluted	$	(0.30	)	$	(0.39	)	$	(0.19	)	$	(0.14	)
Shares used in per share calculations:
Basic and diluted	79,810			80,590			81,445			82,014

(1) In 2017, the Company incurred TVN acquisition- and integration-related expenses of $2.2 million, $0.5 million, $0.1 million and $0.1 million during the first through fourth quarter of 2017. These costs consisted of acquisition-related costs which include outside legal, accounting and other professional services as well as integration-related costs which include incremental costs resulting from the TVN acquisition that are not expected to generate future benefits once the integration is fully consummated. These costs are expensed as incurred and the Company did not incur any TVN acquisition- and integration-related expenses in 2018.

(2) Gross margin decreased to 49.8% during the third quarter of 2018 compared to 52.0% during the second quarter of 2018

and increased to 53.1% during the fourth quarter primarily as a result of product mix. Gross margin decreased to 41.1% during the second quarter of 2017 compared to 48.7% during the first quarter of 2017, primarily due to lower service margins and higher inventory obsolescence charges for the Company’s legacy broadcast video inventory due to reduced demand, as well as higher inventory obsolescence charge for our older Cable Edge product lines. The factors negatively impacting the gross margin during the second quarter of 2017 were mostly absent during the third quarter of 2017, and together with a more favorable product mix, the gross margin increased to 51.1% during the third quarter of 2017 compared to 41.1% during the second quarter of 2017.

(3) During the fourth quarter of 2018, the Company recorded net income primarily due to higher revenues with stronger gross margins of 53.1% coupled with reduced operating expenses as a result of our vigilant cost management.

(4) During the fourth quarter of 2018, the Company released $1.0 million of valuation allowance associated with one of Company’s foreign subsidiaries. During the third and fourth quarter of 2017, the Company recorded $2.4 million of tax benefit associated with the release of tax reserves for uncertain tax positions as a result of the expiration of statute of limitations and $2.5 million of tax benefits associated with the alternative minimum tax refund related to the TCJA, respectively. These tax benefits were offset by $3.0 million tax expense recorded during the fourth quarter of 2017, related to tax law changes in one of the Company’s foreign subsidiaries.