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<?php
/******************************************************************************
* @Author: Boutros AbiChedid
* @Date:   June 20, 2011
* @Websites: http://bacsoftwareconsulting.com/ ; http://blueoliveonline.com/
* @Description: Preserves HTML formating to the automatically generated Excerpt.
* Also Code modifies the default excerpt_length and excerpt_more filters.
* @Tested: Up to WordPress version 3.1.3

Preserve HTML Tags in the Excerpt and Other Settings
Open the functions.php file located in your current theme folder and add (copy and paste) the following code. You can edit lines 22, 25, and 28 accordingly:
*******************************************************************************/
function custom_wp_trim_excerpt($text) {
$raw_excerpt = $text;
if ( '' == $text ) {
//Retrieve the post content.
$text = get_the_content('');

//Delete all shortcode tags from the content.
$text = strip_shortcodes( $text );
$text = apply_filters('the_content', $text);
$text = str_replace(']]>', ']]&gt;', $text);

$allowed_tags = ''; /*** MODIFY THIS. Add the allowed HTML tags separated by a comma.***/
$text = strip_tags($text, $allowed_tags);

$excerpt_word_count = 55; /*** MODIFY THIS. change the excerpt word count to any integer you like.***/
$excerpt_length = apply_filters('excerpt_length', $excerpt_word_count); 
$excerpt_end = '[...]'; /*** MODIFY THIS. change the excerpt ending to something else.***/
$excerpt_more = apply_filters('excerpt_more', ' ' . $excerpt_end);

$words = preg_split("/[\n\r\t ]+/", $text, $excerpt_length + 1, PREG_SPLIT_NO_EMPTY);
if ( count($words) > $excerpt_length ) {
array_pop($words);
$text = implode(' ', $words);
$text = $text . $excerpt_more;
} else {
$text = implode(' ', $words);
}
}
return apply_filters('wp_trim_excerpt', $text, $raw_excerpt);
}
remove_filter('get_the_excerpt', 'wp_trim_excerpt');
add_filter('get_the_excerpt', 'custom_wp_trim_excerpt');
?>