Echelon Identifies Additional Prior Year Lease-Related Accounting ErrorCompany to Revise Previously Issued Financial Statements for Additional Non-Cash Charges(San Jose, CA - April 30, 2008) - Echelon Corporation (NASDAQ: ELON) reported today that, in conjunction with the process of restating its previously filed financial statements for an error in its non-cash equity compensation expenses, KPMG LLP, the Company's independent registered public accounting firm, brought to management's attention that the Company inappropriately accounted for the leases for its corporate headquarters facilities that were entered into in 1999 and 2001. The nature of the required adjustments are all non-cash and do not change the amount of past or future payments due under the lease or the total amount to be paid over the lease term, but will accelerate the recognition of the associated expenses and change their income statement classification. Additionally, the Company will be required to reflect as an asset on its balance sheet the costs paid by the Company's landlord to construct the Company's headquarters facilities, as well as a corresponding liability, because the Company is the "deemed owner" of the headquarters facilities for accounting purposes. After discussion with KPMG and with the recommendation of management, the Audit Committee of the Board of Directors has determined that the Company will also need to restate its historical financial statements. The Company has not yet determined the exact amount of such non-cash adjustments and the specific periods to which they relate, but believes the required adjustments will impact the years ended December 31, 2003 through 2007. Echelon is committed to resolving this issue as expeditiously as possible. However, given the complex nature of the calculations required, the Company may not be able to complete the required revisions and review prior to the Form 10-Q due date of May 12, 2008. More information can be obtained in the Company's Current Report on Form 8-K, which was filed earlier today with the Securities and Exchange Commission. About Echelon Corporation ### Echelon, LonWorks, and the Echelon logo are registered trademarks of Echelon Corporation registered in the United States and other countries.
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