Harman Kardon 2007 Annual Report Download - page 5

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Harman International enters the new fiscal year in
firm control of its future. 2007 was a time of both
achievement and challenge, as well as some signif-
icant distractions. They are behind us and we are
moving forward.
On October 22, 2007, we agreed with KKR and
GS Capital Partners to terminate our merger
agreement and we signed a new agreement
providing for a $400 million
investment by KKR and GSCP.
The investment is in the form
of five year notes, convertible
into Harman common
stock at $104 per share.
The notes will bear
interest of 1.25%, and
the investors have
agreed to a one year
lock up during which
they may not sell or
hedge the investment.
We will use the new
investment for a large
and orderly buy-back of our
company’s shares through an
accelerated share repurchase
(ASR) program. Brian Carroll, a m ember of KKR
whom we have come to know well in the past year,
will join the Harman Board.
We do not agree with the reasons for cancellation
of the original merger agreement. But when it
became clear that the merger would not close, we
carefully reviewed our options. A court trial seek-
ing payment of the break-up fee would be very
expensive and would absorb an enormous
amount of our attention and our time – resources
which our board determined are far better spent
in the conduct of our business and the continued
development of our company. It is a view I truly
share and one I am hopeful you too will share.
Three phases of growth characterize the develop-
ment of most significant companies. Typically, an
entrepreneur of vision and energy creates and
drives the business in its first stage. That stage is
followed by a lengthy period during which the
business significantly expands and discipline and
processes are added. Finally, the time arrives when
a large and vibrant company recognizes the need
for refinement and tuning to provide the best plat-
form for additional strong and profitable growth.
Harman International is in the third stage of that
Message from the Executive Chairman
Our company enters 2008 poised to capitalize on its
deep experience in every business segment.
Harman International 2007 Annual Report 3