Harman Kardon 2007 Annual Report Download - page 26

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Covenants in our existing debt agreements could restrict our operations.
Our existing revolving credit facility contains certain provisions that could restrict our operating and
financing activities. They restrict our ability to, among other things:
1 create or assume liens;
1 enter into sale-leaseback transactions; and
1 engage in mergers or consolidations.
Because of the restrictions on our ability to create or assume liens, we may have difficulty securing
additional financing in the form of additional indebtedness. In addition, our revolving credit facility
contains other and more restrictive covenants, including financial covenants that will require us to achieve
specified financial and operating results and maintain compliance with specified financial ratios. We may
have to curtail some of our operations to maintain compliance with these covenants.
If we fail to comply with the covenants contained in our existing debt agreements, the related debt
incurred under those agreements could be declared immediately due and payable, which could also
trigger a default under other agreements.
Our ability to meet the covenants or requirements in our credit facilities may be affected by events
beyond our control, and we cannot assure you that we will satisfy these covenants and requirements. A
breach of these covenants or our inability to comply with the financial ratios, tests or other restrictions
could result in an event of default under our revolving credit facility. Upon the occurrence of an event of
default under our revolving credit facility, the lenders could elect to declare all amounts outstanding
under our revolving credit facility, together with accrued interest, to be immediately due and payable. If
the payment of our indebtedness is accelerated, we cannot assure you that we will be able to make those
payments or borrow sufficient funds from alternative sources to make those payments. Even if we were to
obtain additional financing, that financing may be on unfavorable terms.
Harman International is a holding company with no operations of its own and therefore our cash flow
and ability to service debt is dependent upon distributions from our subsidiaries.
Our ability to service our debt and pay dividends is dependent upon the operating earnings of our
subsidiaries. The distribution of those earnings, or advances or other distributions of funds by those
subsidiaries to Harman International, all of which could be subject to statutory or contractual restrictions,
are contingent upon the subsidiaries’ earnings and are subject to various business considerations.
Any of the foregoing factors could have a material adverse effect on our business, results of operations
and financial condition. In light of these risks and uncertainties, there can be no assurance that the results
and events contemplated by the forward-looking statements contained in this report will in fact transpire.