Harman Kardon 2008 Annual Report Download - page 24

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6
As of June 30, 2008 we had 1,868 trademark registrations and 307 pending trademark applications around
the world. On that date, we also had 2,029 United States and foreign patents and 2,085 pending patent
applications covering various audio, infotainment and software products.
Seasonality
We experience seasonal fluctuations in sales and earnings. Historically, our first fiscal quarter ended
September 30 is generally the weakest due to automotive model year changeovers and the summer holidays
in Europe. Our sales and earnings may also vary due to customer acceptance of our products, product
offerings by our competitors and general economic conditions, including fluctuations in foreign currency
exchange rates.
Customers/Industry Concentration
We are subject to various risks related to our dependence on key customers. Sales to Daimler accounted
for 18 percent and sales to Audi/VW accounted for 11 percent of our total consolidated net sales for the
fiscal year ended June 30, 2008. The majority of the Daimler sales were to the Mercedes-Benz division.
Accounts receivable due from Daimler accounted for 8 percent and accounts receivable due from
Audi/VW accounted for 11 percent of total consolidated accounts receivable at June 30, 2008. We
anticipate that Daimler and Audi/VW will continue to account for a significant portion of our net sales
and accounts receivables for the foreseeable future.
For the fiscal year ended June 30, 2008, approximately 72 percent of our sales were to automobile
manufacturers. Our automotive customers are not obligated to any long-term purchase of our products.
The loss of Daimler, Audi/VW or any of our other significant automotive customers would have a
material adverse effect on our total consolidated net sales, earnings and financial position.
Backlog Orders
We manufacture automotive products and systems on a just-in-time basis and maintain sufficient inventories
of finished goods to meet Consumer and Professional customer orders promptly. As a result, we do not
consider the level of backlog to be an important indication of our future performance. Our backlog was
approximately $69 million at June 30, 2008. We expect to deliver these products within the next twelve
months. Our backlog was approximately $27 million at June 30, 2007.
Warranty Liabilities
We warrant our products to be free from defects in materials and workmanship for periods ranging from six
months to six years from the date of purchase, depending on the business segment and product. The warranty
is a limited warranty, and it may impose certain shipping costs on the customer and exclude deficiencies in
appearance except for those evident when the product is delivered. Dealers and warranty service providers
normally perform warranty service for loudspeakers and electronics in the field, using parts we supply on
an exchange basis. Estimated warranty liabilities are based upon past experience with similar types of
products, the technological complexity of certain products, replacement cost and other factors. We take
these factors into consideration when assessing the adequacy of our warranty provisions for periods still open
to claim.