SUNNYVALE, Calif. -- Harmonic Inc. (Nasdaq: HLIT - News) today announced its results for the quarter ended June 28, 2002. For the second quarter of 2002, Harmonic reported net sales of $56.3 million, up from $49.3 million for the second quarter of 2001. Domestic sales represented 77% of total sales for the second quarter of 2002.

"We are pleased with our second quarter performance, which had higher revenue and a reduced loss in the face of challenging market conditions," said Anthony J. Ley, Chairman, President and Chief Executive Officer. "The success of our new products for video-on-demand and HDTV demonstrated our ability to anticipate emerging requirements and rapidly bring high quality solutions to market. In addition, through our focused balance sheet management, we are very pleased to report that our cash balance grew from $52 million to almost $57 million during the second quarter." "With concerns in the financial markets about the impact of Adelphia Communications' bankruptcy and other recent events in the telecommunications industry, we are preparing for the possibility of a more challenging capital spending environment for our cable customers during the remainder of this year. We also expect spending by our domestic satellite customers and European customers to be relatively flat because of pending business consolidations, financial restructuring and regulatory issues. Consequently, we took action last week to reduce our workforce by approximately 80 full-time employees and 20 consultants and temporary staff." "In the near term, we remain focused on cost reduction efforts, while maintaining our strong market position and technology leadership across a range of broadband markets worldwide. Despite the current market uncertainty, we believe that the future of broadband communications will be driven by consumer demand for high-speed access, video-on-demand, content-on-demand, video conferencing and other advanced services." Harmonic recorded a charge of approximately $2.9 million, or $0.05 per share, during the second quarter of 2002 to provide for probable losses in connection with the bankruptcy filing of Adelphia Communications. In addition, the second quarter results include a benefit of $2.9 million, or $0.05 per share, resulting from products sold during the quarter which had been reserved in prior years as excess and obsolete inventories. Including the receivables and inventory items noted above, but excluding the effects of non-cash accounting charges for the amortization of intangibles, the pro forma net loss for the second quarter of 2002 was $5.3 million, or $0.09 per share, on 59,552,000 basic weighted average shares outstanding. These results compare to a pro forma net loss of $30.2 million, or $0.52 per share, on 58,177,000 basic weighted average shares outstanding for the same period of 2001, excluding amortization of goodwill and other intangibles. Including the amortization of intangibles, the net loss for the second quarter of 2002 was $11.1 million, or $0.19 per share. The Company anticipates that it will record a charge for severance costs of approximately $1.0 million during the third quarter of 2002 for the recent workforce reduction. In a separate press release today, Harmonic also announced the election to its Board of Directors of William F. Redderson, former Executive Vice President of Corporate Strategy at BellSouth, replacing David Lane who served on the Board since 1992. Harmonic also announced today that its Board of Directors approved the adoption of a stockholder rights plan. Under the plan, Harmonic will issue a dividend of one right for each share of common stock of the company held by stockholders of record as of the close of business on August 7, 2002. Harmonic Inc.