Harmonic announced today that it has reached a tentative settlement on a shareholder class-action lawsuit that will result in a $6.4 million charge in its annual report.
A class-action suit was filed against Harmonic and some of its officers and directors in 2000. Harmonic said that it is in its best interest to avoid the cost, management distraction and risk associated with a trial, which is currently scheduled for August.
The tentative agreement is subject to certain contingencies, including execution of a definitive agreement and court approval. The agreement will provide a full release of Harmonic and the other named defendants in connection with the allegations in the lawsuit without any admission of fault on the part of Harmonic or its officers and directors.
Harmonic said the settlement includes $15 million and an additional $1.4 million for related legal fees and expenses. Harmonic will pay $6.4 million, and the company’s insurance carriers, having funded most litigation costs to date, will contribute the remaining $10 million.
Harmonic also announced that it will have to lower its fourth-quarter and full-year earnings and revenue results following its audit completion. The settlement and adjustments to its 2007 results will lower fourth-quarter profit to 7 cents per share, from 15 cents per share, and will reduce 2007 net income to 28 cents per share, from 36 cents per share. The company’s adjusted earnings results for both periods will stay the same.
Harmonic expects that $820,000 in revenue and $413,000 in costs affected by the adjustment will be recognized in the first quarter of this year.
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