Harmonic Inc (HLIT) – Odd Lot Tender – $49 potential

Current Price – $5.71

Offer Price - $5.75 – $6.25

Potential Gain – 8.7% or $49 for Odd Lots at $6.25 tender offer price

Expiration date – June 10, 2013

Odd Lot holders (less than 100 shares) are not subject to proration

Summary:

Harmonic Inc., a Delaware corporation, is offering to purchase up to 16,000,000 shares of its common stock (representing approximately 14.1% of our outstanding shares as of April 10, 2013), par value $0.001 per share (the “common stock”), at a price not greater than $6.25 nor less than $5.75 per share, net to the seller in cash.

Upon the terms and subject to the conditions of the Offer, we will determine a single per share price, not greater than $6.25 nor less than $5.75 per share, net to the seller in cash, less any applicable withholding taxes and without interest, that we will pay for shares properly tendered and not properly withdrawn in the Offer, taking into account the total number of shares tendered and the prices specified by tendering stockholders. After the Offer expires, we will look at the prices chosen by stockholders for all of the shares properly tendered. We will then select the lowest purchase price (in multiples of $0.05) within the price range specified above that will allow us to buy 16,000,000 shares. If fewer than 16,000,000 shares are properly tendered, we will select the price that will allow us to buy all the shares that are properly tendered and not properly withdrawn.

Proration:

If more than 16,000,000 shares (or such greater number of shares as we may elect to accept for payment, subject to applicable law) are properly tendered at or below the purchase price and not properly withdrawn prior to the Expiration Time, we will purchase shares:

- first, from all holders of “odd lots” of less than 100 shares who properly tender all of their shares at or below the purchase price we determine and do not properly withdraw them before the Expiration Time;

second, from all other stockholders who properly tender shares at or below the purchase price we determine, on a pro rata basis (except for stockholders who tendered shares conditionally for which the condition was not satisfied); and

third, only if necessary to permit us to purchase 16,000,000 shares (or such greater number of shares as we may elect to accept for payment, subject to applicable law), from holders who have tendered shares at or below the purchase price conditionally (for which the condition was not initially satisfied) by random lot, to the extent feasible. To be eligible for purchase by random lot, stockholders whose shares are conditionally tendered must have tendered all of their shares.

Source of Funds:

Assuming that 16,000,000 shares are purchased in the Offer at the maximum purchase price of $6.25 per share, the aggregate purchase price will be approximately $100 million. We anticipate that we will pay for the shares tendered in the Offer, as well as paying related fees and expenses, from our cash, cash equivalents and short-term investments.

We will utilize a portion of our existing cash in connection with the Offer and, as a result, will have reduced liquidity. Reduced liquidity could have certain material adverse effects on us, including, but not limited to, the following: (i) our available liquidity in the future for acquisitions, working capital, capital expenditures, and general corporate or other purposes could be impaired, and additional financing may not be available on terms acceptable to us; (ii) our ability to withstand competitive pressures may be decreased; and (iii) our reduced level of liquidity may make us more vulnerable to economic downturns, and reduce our flexibility in responding to changing business, regulatory and economic conditions.

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