In addition, following the completion of year-end audit procedures, the Company has identified certain adjustments to its preliminary unaudited financial statements announced on January 29, 2008 for the quarter and year ended December 31, 2007. Revised unaudited financial statements, which include the litigation settlement charge and related expenses, the effect of the year-end adjustments and a revised GAAP to non-GAAP reconciliation, are attached at the end of this release. The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those more fully described in Harmonic’s filings with the Securities and Exchange Commission, including our annual report filed on Form 10-K for the year ended December 31, 2006, our quarterly report on Form 10-Q for the quarterly period ended September 28, 2007, and our annual report on Form 10-K for the year ended December 31, 2007 that is expected to be filed on March 17, 2008. GAAP to Non-GAAP Income Reconciliation (Unaudited) Three Months Ended Three Months Ended December 31, 2007 December 31, 2006 ————————– ————————- Gross Operating Net Gross Operating Net Margin Expense Income Margin Expense Income —————————————————- (In thousands) GAAP $ 40,715 $ 35,779 $ 6,639 $ 30,164 $ 26,813 $ 5,041 Cost of sales related to severance costs 287 287 Cost of sales related to product discontinuance 1,134 1,134 Cost sales related to stock based compensation expense 280 280 202 202 Research and development expense related to stock based compensation expense (573) 573 (334) 334 Selling, general and administrative expense related to severance costs (198) 198 Selling, general and administrative expense related to excess facilities costs (482) 482 (116) 116 Selling, general and administrative expense related to stock based compensation expense (868) 868 (810) 810 Selling, general and administrative expense related to litigation settlement (6,400) 6,400 Impairment and amortization of fixed assets and intangibles 1,474 (160) 1,634 1,237 (491) 1,728 ————————– ————————- Non-GAAP $ 42,469 $ 27,296 $16,876 $ 33,024 $ 24,864 $ 9,850 ========================== ========================= GAAP income per share - basic $ 0. read more

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