Stockholders' Equity

12 Months Ended

Dec. 31, 2012

Stockholders' Equity

NOTE 12: STOCKHOLDERS’ EQUITY

Preferred Stock

Harmonic has 5,000,000 authorized shares of preferred stock. In July 2002, the Company classified 100,000 of these shares as Series A Participating Preferred Stock in connection with the Board’s same day approval and adoption of a stockholder rights plan. This plan had a term of ten years and it expired in July 2012.

Common Stock Issuances

During the year ended December 31, 2010, the Company issued 14,150,122 shares of common stock as part of the consideration for the purchase of all of the outstanding shares of Omneon. The shares had a fair market value of $95.9 million at the time of issuance. To secure post-closing indemnification obligations of the holders of Omneon capital stock, the Company deposited into escrow an aggregate of approximately $21.0 million in cash and 1,926,920 shares of the Company’s common stock that would otherwise have been issued to those holders. In the first quarter of 2012, the Company submitted an indemnification claim for reimbursement from escrow and received reimbursement of $0.8 million, representing $0.5 million of cash and 40,372 shares of common stock valued at $0.3 million. The return of shares was reflected as a reduction in common stock and additional paid-in-capital. The reimbursement was for previously expensed legal and tax costs incurred by the Company following the date of acquisition. The indemnification period ended on March 15, 2012, and the cash and shares remaining in escrow were distributed to the holders of Omneon capital stock.

Common Stock Repurchases

On April 24, 2012, the Company’s Board of Directors (the “Board”) approved a stock repurchase program that provides for the repurchase of up to $25 million of the Company’s outstanding common stock during the term of the program, which expires 18 months from Board approval. Under the program, the Company may purchase shares of common stock through open market transactions at prices deemed appropriate by management, subject to certain pre-determined price/volume guidelines set, from time to time, by the Board. The timing and amount of repurchase transactions under the program depend on a variety of factors, including price, corporate and regulatory requirements, strategic priorities and other market conditions. The purchases are funded from available working capital. The program may be suspended or discontinued at any time.

During 2012, under the program, the Company repurchased and retired approximately 5.1 million shares of common stock at an average price of $4.43 per share, for an aggregate purchase price of approximately $22.6 million, leaving approximately $2.4 million available for purchases under the program as of December 31, 2012. The Company charges the excess of cost over par value for the repurchase of its common stock to additional paid-in capital.

On January 28, 2013, the Company’s Board approved a $75 million increase in its stock repurchase program. On February 6, 2013, the Board approved a modification to the program that permits the Company to repurchase its common stock pursuant to a plan that meets the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934. The program is presently scheduled to expire in July, 2014. On February 19, 2013, the Board approved a further approximately $35 million increase to the program, contingent upon the closing of a sale of the Company’s cable access HFC business. See Note 20 “Subsequent Events”. The Board has authorized aggregate repurchases under the program of $135 million, $22.6 million of which had been utilized for repurchases as of December 31, 2012.

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss were as follows (in thousands):

	December 31,
	2012			2011
Foreign currency translation adjustments	$	(502	)	$	(897	)
Unrealized gain on investments		37			22
Accumulated Other Comprehensive Loss	$	(465	)	$	(875	)