A bit of PHP to preserve html formatting in standard WordPress excerpts

/**
* allow formatted text in excerpts
**/
function better_trim_excerpt($text)
{
$raw_excerpt = $text;
if ( '' == $text ) {
$text = get_the_content('');
$text = strip_shortcodes( $text );
$text = apply_filters('the_content', $text);
$text = str_replace(']]>', ']]>', $text);

// Removes any JavaScript in posts (between <script> and </script> tags)
$text = preg_replace('@<script[^>]*?>.*?</script>@si', '', $text);

// Enable formatting in excerpts - Add HTML tags that you want to be parsed in excerpts, default is 55
$text = strip_tags($text, '<strong><b><em><i><a><code><kbd><p><br><ul><ol><li><img>');

// Set custom excerpt length - number of words to be shown in excerpts
$excerpt_length = apply_filters('excerpt_length', 60);

// Modify excerpt more string at the end from [...] to ...
// $excerpt_more = apply_filters('excerpt_more', ' ' . '...');

$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);

// IMPORTANT! Prevents tags cutoff by excerpt (i.e. unclosed tags) from breaking formatting
$text = force_balance_tags( $text );

$text = $text . $excerpt_more;
} else {
$text = implode(' ', $words);
}
}
return apply_filters('wp_trim_excerpt', $text, $raw_excerpt);
}

// Remove the native excerpt function, and replace it with our improved function
remove_filter('get_the_excerpt', 'wp_trim_excerpt');
add_filter('get_the_excerpt', 'better_trim_excerpt');

I found this code at the bottom of this page: wordpress.stackexchange.com