Harman Kardon 2007 Annual Report Download - page 67

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54
Note 8 - Fair Value of Financial Instruments
The estimated fair value of our financial instruments was determined using market information and
valuation methodologies. In the measurement of the fair value of certain financial instruments, quoted
market prices were unavailable and other valuation techniques were utilized. These derived fair value
estimates are significantly affected by the assumptions used.
The fair values of cash and cash equivalents, investments, receivables, accounts payable, accrued
liabilities and short-term borrowings approximate their carrying values due to the short-term nature of
these items.
Fair values of long-term debt are based on market prices where available. When quoted market prices are
not available, fair values are estimated using discounted cash flow analysis, based on our current
incremental borrowing rates for similar types of borrowing arrangements.
The fair value of long-term debt approximates the carrying value at June 30, 2007.
Note 9 - Warranty Liabilities
Details of the estimated warranty liability are as follows:
Years Ended June 30,
($000s omitted) 2007 2006
Beginning balance $ 60,768 48,582
Warranty provisions 49,148 55,925
Warranty payments (cash or in-kind)
(61,768)
(43,739)
Ending balance $ 48,148 60,768
The warranty liabilities are included in accrued liabilities.