Harman Kardon 2007 Annual Report Download - page 28

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15
The downgrade in our credit ratings resulting from the announcement of the proposed merger could
negatively affect our ability to access capital.
After the announcement of the proposed merger, Standard & Poor’s Rating Services (S&P) downgraded
our corporate credit ratings. The uncertainty about the effect of the merger may further adversely affect
our credit rating. Downgrades in our corporate credit ratings generally cause borrowing costs to increase,
the potential pool of investors and funding sources to decrease and may have other negative consequences
on our business.
Most of our large customers, suppliers and counterparties require an expected level of creditworthiness in
order for them to enter into transactions with us. As our corporate credit ratings decline, particularly
below investment grade, counterparties may decline to do business with us.
In the future, we could have liquidity needs that could be difficult to satisfy under some circumstances.
The inability to raise capital on favorable terms, particularly during times of uncertainty in the financial
markets, could impact our ability to sustain and grow our businesses, which would increase our capital
costs. Our access to the financial markets could be adversely impacted by the merger, the recent
downgrade in our corporate credit ratings and various other factors, such as:
1 changes in credit markets that reduce available credit or the ability to renew existing liquidity
facilities on acceptable terms;
1 changes in interest rates;
1 a deterioration of our credit or a further reduction in our credit ratings;
1 a material breakdown in our risk management procedures; and
1 the occurrence of material adverse changes in our businesses that restrict our ability to access the
credit markets.
A lack of necessary capital and cash reserves could adversely impact the evaluation of our
creditworthiness by counterparties and rating agencies, and would likely increase our capital costs. An
increase in our capital costs could have a material negative impact on our results of operations and
financial condition.
Item 1B. Unresolved Staff Comments
None.