Harman Kardon 2008 Annual Report Download - page 34

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16
We also own or lease other facilities that are not considered principal properties. We believe that our
facilities are suitable and adequate for our present needs and that suitable additional or substitute facilities
will be available, if required.
Item 3. Legal Proceedings
In re Harman International Industries, Inc. Securities Litigation
On October 1, 2007, a purported class action lawsuit was filed by Cheolan Kim (the “Kim Plaintiff”)
against the Company and certain of its officers in the United States District Court for the District of
Columbia seeking compensatory damages and costs on behalf of all persons who purchased the
Company’s common stock between April 26, 2007 and September 24, 2007 (the “Class Period”). The
original complaint purported to allege claims for violations of Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
The complaint alleged that defendants omitted to disclose material adverse facts about the Company’s
financial condition and business prospects. The complaint contended that had these facts not been
concealed at the time the merger agreement with KKR and GSCP was entered, there would not have been
a merger agreement, or it would have been at a much lower price, and the price of the Company’s
common stock therefore would not have been artificially inflated during the Class Period. The Kim
Plaintiff alleged that, following the reports that the proposed merger was not going to be completed, the
price of the Company’s common stock declined causing the plaintiff class significant losses.
On November 30, 2007, the Boca Raton General Employees’ Pension Plan (the “Boca Raton Plaintiff”)
filed a purported class action lawsuit against the Company and certain of its officers in the United States
District Court for the District of Columbia seeking compensatory damages and costs on behalf of all
persons who purchased the Company’s common stock between April 26, 2007 and September 24,
2007. The allegations in the Boca complaint are essentially identical to the allegations in the original
Kim complaint, and like the original Kim complaint, the Boca complaint alleges claims for violations of
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
On January 16, 2008, the Kim Plaintiff filed an amended complaint. The amended complaint, which
extended the Class Period through January 11, 2008, contended that, in addition to the violations alleged
in the original complaint, the Company also violated Sections 10(b) and 20(a) and Rule 10b-5
by knowingly failing to disclose “significant problems” relating to its personal navigation device (“PND”)
“sales forecasts, production, pricing, and inventory” prior to January 14, 2008. The amended complaint
claimed that when “Defendants revealed for the first time on January 14, 2008 that shifts in PND sales
would adversely impact earnings per share by more than $1.00 per share in fiscal 2008,” that led to a
further decline in the Company’s share value and additional losses to the plaintiff class.
On February 15, 2008, the Court ordered the consolidation of the Kim action with the Boca action, the
administrative closing of Boca, and designated the short caption of the consolidated action as In re
Harman International Industries Inc. Securities Litigation, civil action no. 1:07-cv-01757 (RWR). That
same day, the Court appointed Arkansas Public Retirement System as Lead Plaintiff and approved the
law firm Cohen, Milstein, Hausfeld and Toll, P.L.L.C. to serve as Lead Counsel.