Harman Kardon 2008 Annual Report Download - page 29

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11
Obligations to correct product defects covered by our warranties could adversely affect our financial
results.
We warrant our products to be free from defects in materials and workmanship for periods ranging from
six months to six years. Costs to correct product defects may exceed our estimates and adversely affect
our results of operations and financial condition.
Bankruptcy of a significant customer could have a material adverse effect on our liquidity, financial
position and results of operations.
A significant portion of our revenues are derived from sales to customers in the automotive industry,
where companies have experienced financial difficulties. As part of the bankruptcy process, our pre-
petition receivables may not be realized, customer manufacturing sites may be closed or contracts voided.
The bankruptcy of a major customer could have a material adverse effect on the Company’s liquidity,
financial position, and results of operations.
We may lose market share if we are unable to compete successfully against our current and future
competitors.
The audio and video product markets that we serve are fragmented, highly competitive, rapidly changing
and characterized by intense price competition.
Many manufacturers, large and small, domestic and foreign, offer audio and video systems that vary
widely in price and quality and are marketed through a variety of channels, including audio and video
specialty stores, discount stores, department stores, mail order firms, and the Internet. Some of our
competitors have financial and other resources greater than ours. We cannot assure you that we will
continue to compete effectively against existing or new competitors that may enter our markets. We also
compete indirectly with automobile manufacturers that may improve the quality of original equipment
audio and electronic systems, reducing demand for our aftermarket mobile audio products, or change the
designs of their cars to make installation of our aftermarket products more difficult or expensive.
If we do not continue to develop, introduce and achieve market acceptance of new and enhanced
products, our sales may decrease.
In order to increase sales in current markets and gain entry into new markets, we must maintain and
improve existing products, while successfully developing and introducing new products. Our new and
enhanced products must respond to technological developments and changing consumer preferences. We
may experience difficulties that delay or prevent the development, introduction or market acceptance of
new or enhanced products. Furthermore, we may be unable to detect and correct defects in some of our
products before we ship them. Delays or defects in new product introduction may result in loss of sales or
delays in market acceptance. Even after introduction, our new or enhanced products may not satisfy
consumer preferences and product failures may cause consumers to reject our products. As a result, these
products may not achieve market acceptance. In addition, our competitors’ new products and product
enhancements may cause consumers to defer or forego purchases of our products.