Harman Kardon 2008 Annual Report Download

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Table of contents

  • Page 1
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  • Page 2
    ... years ago, he has been a constant source of energy and inspiration, building a legendary family of brands and transforming Harman into a premium supplier of audio and infotainment systems for the automotive, consumer and 1955: Harman Kardon Festival, the world's first stereo receiver professional...

  • Page 3
    Financial HigHligHts Five-Year SummarY (in thousands, except per share data, for the fiscal years ended June 30) Net Sales Operating Income ... 138,501 124,484 107,786 1.73 2,826,925 427,952 223,109 1,339,846 Net Sales (in Billions) 4.11 3.55 3.24 3.03 2.71 Earnings Per Share (dilluted) 4.72 3....

  • Page 4
    ... Officer; Richard Sorota, President - Consumer Division Standing, left to right: David Karch, Vice President - Operational Excellence...2008 by Todd A. Suko); Herbert Parker, Chief Financial Officer; John Stacey, Vice President - Human Resources; Klaus Blickle, Chief Executive Officer - Automotive...

  • Page 5
    ... ABB Group, and Kenneth Reiss, a former managing partner with Ernst & Young. Ann McLaughlin Korologos, who has served the Harman Board with distinction since 1995, was elected as Lead Director. These changes bring a rich global diversity which now spans four nationalities from the Americas, Europe...

  • Page 6
    ... Bowers & Wilkins, adding another premium brand to our automotive infotainment portfolio. During 2008, the Consumer division launched a number of innovations including new docking stations for Apple® iPod® and iPhone™ products, a new line of premium aftermarket automotive speakers, and new home...

  • Page 7
    ... and external collaboration. A cross-functional team spanning executive management, functional and geographic managers now guides key decisions. A new group Intranet and town hall meetings with executives are reinforcing to employees the rewards of working as One Harman and embracing key strategic...

  • Page 8
    6JIDBDI>K::M8:AA:C8: The new Porsche Cayenne is among the countless vehicles delighting drivers with its premium Harman infotainment systems. + =6GB6C>CI:GC6I>DC6A6CCJ6AG:EDGI'%%-

  • Page 9
    ...mid-range segments. An estimated 20 million vehicles across the Americas, Europe and Asia are equipped with our systems from our Becker, Harman/Kardon, JBL, Infinity, Lexicon, Mark Levinson and other brands. Harman systems delight drivers and enthusiasts of the BMW 7 Series, Mercedes S-Class, Rolls...

  • Page 10
    8DCHJB:G:M8>I:B:CI Harman's partnerships with other premium consumer brands such as Trek® Bicycle, Apple® and Nokia® provide the forum for building new lifestyle excitement. - =6GB6C>CI:GC6I>DC6A6CCJ6AG:EDGI'%%-

  • Page 11
    ...for Harman products such as headphones, iPod and iPhone docking stations, and audio systems for computer and gaming applications. Typical of this trend is the Go + Playâ„¢ iPod speaker system, named one of the Top Ten summer hits for 2008 by online reviewer Amazing Tech Products. Our JBL LS80 series...

  • Page 12
    EGD;:HH>DC6AEG:8>H>DC Legendary guitarist Peter Frampton is among the leading entertainers who record, perform and broadcast with help from Harman Professional systems. &% =6GB6C>CI:GC6I>DC6A6CCJ6AG:EDGI'%%-

  • Page 13
    ...from every genre use Harman microphones, mixing consoles, amplifiers and speakers on tour. World-class entertainment facilities boasting permanent Harman installations range from London's O2 Arena, to Nashville's Grand Ole Opry, to the Sydney Opera House. We also deliver the high-fidelity sporting...

  • Page 14
    ... and live performances. For automotive, we integrate audio, video, navigation and communications for a safe and pleasant driving experience. Our network and integration skills put consumers' favorite music, video and photos at hand around the home or on the go. Harman scientists and engineers are...

  • Page 15
    UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2008 Commission File Number 001-09764 Harman International Industries, Incorporated (Exact ...

  • Page 16
    ... Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions, and Director Independence Principal Accounting Fees and Services Exhibits and Financial Statement...

  • Page 17
    ...our manufacturing, engineering and administrative organizations; model-year changeovers in the automotive industry; our ability to enforce or defend our ownership and use of intellectual property; our ability to maintain a competitive technological advantage within the systems, services and products...

  • Page 18
    ...or at a facility of one of our significant customers; or work stoppages at a common carrier or a major shipping location; commodity price fluctuations; the outcome of pending or future litigation ... information under the caption "Risk Factors" which is located in Item 1A of Part I of this report. ii

  • Page 19
    ... sold in Europe. Our Consumer segment designs, manufactures and markets audio and electronic systems for home, mobile and multimedia applications. Our Consumer home products and systems are marketed worldwide under brand names including JBL, Infinity, Harman/Kardon, Lexicon, Mark Levinson, Revel and...

  • Page 20
    ... navigation, traffic information, voice-activated telephone and climate control, rear seat entertainment, wireless Internet access, hard disk recording, MP3 playback and a high-end branded audio system. In fiscal 2008, we supplied infotainment systems for vehicles manufactured by Mercedes-Benz, BMW...

  • Page 21
    ... the Harman/Kardon, Mark Levinson and Lexicon brand names. Our Harman/Kardon home electronics line includes audio/video receivers featuring Logic 7, Dolby Digital and DTS surround sound processing capabilities and multi-channel amplifiers, DVD players and CD players. We design high-end electronics...

  • Page 22
    ... products, equalizers, and special effects devices that are used in live sound applications and in recording studios to produce sound effects and refine final mixes. These products are sold under the Lexicon, DigiTech, dbx and BSS brand names. We produce microphones, audio headphones, surround-sound...

  • Page 23
    ... JBL,® Infinity,® Harman/Kardon,® Lexicon,® Mark Levinson,® Revel,® Crown,® Becker,® Soundcraft,® Spirit,® DigiTech,® AKG,® Studer,® BSS® and dbx.® Our trademark registrations cover use of trademark rights in connection with various products, such as loudspeakers, speaker systems...

  • Page 24
    ...and accounts receivables for the foreseeable future. For the fiscal year ended June 30, 2008, approximately 72 percent of our sales were to automobile manufacturers. Our automotive customers are not obligated to any long-term purchase of our products. The loss of Daimler, Audi/VW or any of our other...

  • Page 25
    ... competitors in this high-end market include Krell, McIntosh, Audio Research, Meridian, Linn and Classe. In the multimedia market, we supply Apple stores and other retailers with JBL and Harman/Kardon speaker systems that serve Apple's iPod and iPhone as well as other MP3 players. Our principal...

  • Page 26
    ... 30, 2008, we had 11,694 full-time employees, including 4,834 employees located in North America and 6,860 located outside of North America. Website Information Our corporate website is located at www.harman.com. Through our website we make available, free of charge, access to our Annual Reports on...

  • Page 27
    ... of our products. The loss of sales to Daimler, Audi/VW, or to any of our other significant automotive customers, would have a material adverse effect on our consolidated sales, earnings and financial position. In recent years, we held a majority of Daimler's infotainment and audio system business...

  • Page 28
    ... and retail sales. In addition, our sales of audio, electronic and infotainment products to automotive customers are dependent on the overall success of the automobile industry, as well as the willingness of automobile purchasers to pay for the option of a premium branded automotive audio system or...

  • Page 29
    ... 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...

  • Page 30
    ... property than in the United States; and difficulty in staffing and managing geographically diverse operations. • • These and other risks may increase the relative price of our products compared to those manufactured in other countries, reducing the demand for our products. If we are unable...

  • Page 31
    ...liens; enter into sale-leaseback transactions; ...financial results. As more fully described in Part II, Item 3 "Legal Proceedings," of this report, we are currently involved in litigation arising out of or relating to the events leading up to the termination of the proposed acquisition of the Company...

  • Page 32
    ...management's time and attention away from our business. Harman International is a holding company with no operations of its own and therefore our cash flow and ability to service... on our business, results of operations and financial condition. In light of these risks and uncertainties, there can be...

  • Page 33
    ... fiscal year 2009. Certain information regarding our principal facilities are described in the table below. Location Atlanta, Georgia Northridge, California Segments Consumer Automotive Consumer Professional Automotive Consumer Professional Automotive Professional Automotive Consumer Automotive Size...

  • Page 34
    ...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...

  • Page 35
    ... on December 7, 2007 in the United States District Court for the District of Columbia and an amended purported putative class action complaint on June 2, 2008 against the Company and certain of its officers and directors alleging violations of the Employee Retirement Income Security Act ("ERISA...

  • Page 36
    ... Becker Automotive Systems GmbH. In October 2006 Harman Becker received notice of a complaint filed by Siemens AG against it with the Regional Court in Düsseldorf in August 2006 alleging that certain of Harman Becker's infotainment products including both radio receiver and Bluetooth hands free...

  • Page 37
    ... our Company in June 2008 as Executive Vice President and Chief Financial Officer. On August 15, 2008, Mr. Parker assumed the additional position of principal accounting officer. Prior to joining our Company, he served as Chief Financial Officer of ABB North America, a power automation company, from...

  • Page 38
    ...28, 2008, there were approximately 123 record holders of our common stock. The table below sets forth the reported high and low sales prices for our common stock, as reported on the New York Stock Exchange, for each quarterly period for fiscal years ended June 30, 2008 and 2007. Fiscal 2008 High Low...

  • Page 39
    ... through June 30, 2008 was 25,422,861. For a description of limitations on repurchases of shares and on the payment of dividends, see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Financial Condition" located in Item 7 of Part II of this report. 21

  • Page 40
    ... year-to-year variances included in our results of operations and an analysis of our restructuring program. We also provide specific information regarding our three reportable business segments: Automotive, Consumer and Professional. We then discuss our financial condition at June 30, 2008...

  • Page 41
    ... video systems such as home theatres. Aftermarket mobile products include speakers and amplifiers that deliver audio entertainment in the vehicle. Consumer products are primarily distributed through retail outlets. Professional designs, manufactures and markets loudspeakers and electronic systems...

  • Page 42
    ... sale of the Notes were used to repurchase an aggregate of 7,224,779 shares of our common stock through an accelerated share repurchase program. In addition to terminating the merger agreement, we appointed new members to the executive management team and Board of Directors during fiscal year 2008...

  • Page 43
    ..., of our consolidated financial statements for additional information regarding our goodwill balance and annual impairment test. Pre-Production and Development Costs We incur pre-production and development costs related to infotainment systems that we develop for automobile manufacturers pursuant to...

  • Page 44
    ... for periods ranging from six months to six years from the date of purchase, depending on the business segment and product. Our dealers and warranty service providers normally perform warranty service in field locations and regional service centers, using parts and replacement finished goods we...

  • Page 45
    ...to higher sales of infotainment systems to automotive customers, strong sales of multimedia products, and increased sales in the professional market. We present below a summary of our net sales by reportable business segment: ($000s omitted) Automotive Consumer Professional Total Fiscal 2008 $ 2,970...

  • Page 46
    ... sales in the United States. Multimedia products include popular accessories for the iPod such as the JBL OnStage and OnTime. Sales in the United States were adversely affected by substantial competition in this market. Sales of Harman/Kardon home electronic products were also higher in Europe...

  • Page 47
    ...to Chrysler and BMW primarily for their mid-level vehicles. We also had lower sales to Mercedes due to a decrease in production for the E-Class and price reductions. Historically, sales of these high-level infotainment systems generated higher margins for our Automotive division. In fiscal 2008, our...

  • Page 48
    ... of net sales to be approximately the same in fiscal 2009 as we continue to develop a record number of infotainment system programs in our Automotive division. Employee compensation and benefit costs are also included in SG&A expenses. We have recorded stock-based compensation expense under the...

  • Page 49
    ... of sales were 24.9 percent in fiscal 2008, an increase of 0.6 percentage points compared to the prior year. Selling expenses and R&D costs are the most significant components of SG&A expenses. Selling expenses are incurred to support a broad range of branded audio products. These products are...

  • Page 50
    ... in South Africa and a small facility in Massachusetts. Our corporate headquarters is currently transitioning to Stamford, Connecticut. In fiscal 2008, SG&A expenses included $42.2 million for our restructuring program. Cash paid for these initiatives was $14.1 million. In addition, we have recorded...

  • Page 51
    ... our operating income by reportable business segment: Percent of net sales 4.1% -1.4% 15.0% --3.4% Percent of net sales 13.6% 2.7% 14.4% --10.9% Percent of net Sales 15.1% 10.3% 11.5% --12.2% ($000s omitted) Automotive Consumer Professional Other Total Interest Expense $ Fiscal 2008 120,466 (7,454...

  • Page 52
    ...higher sales volume. Investing Activities Net cash used in investing activities was $142.5 million in fiscal 2008, compared to $180.0 million in fiscal 2007. The fiscal 2008 activity primarily reflects investments in our manufacturing facilities and contingent purchase price consideration related to...

  • Page 53
    ... value per Note exceeds $1,000, the Company will also deliver, at its election, cash or common stock or a combination of cash and common stock for the conversion value in excess of $1,000. In May 2008, the Financial Accounting Standards Board ("FASB") issued FSP APB 14-1, Accounting for Convertible...

  • Page 54
    ... of goods and services with defined terms as to quantity, price and timing of delivery. (d) See Note 8 to our consolidated financial statements. Recent Developments As previously announced, on June 30, 2008, Dr. Sidney Harman resigned as non-executive Chairman of the Board. Dr. Harman continues...

  • Page 55
    ... and channel strategy for China to accelerate the penetration of our premium brands and products in this large, fastgrowing region. Business Outlook The Company has initiated a detailed five-year strategic planning process to address cost base and global competitiveness, including manufacturing...

  • Page 56
    ... Years Ending June 30, 2010 2011 2012 2013 Thereafter Total Debt obligation Average interest rate Foreign Currency Risk $0.1 25.1 0.1 0.1 0.1 0.3 5.00% $ 25.8 --- $ 25.8 --- 5.00% 3.39% 5.00% 5.00% 5.00% We maintain significant operations in Germany, the United Kingdom, France, Austria...

  • Page 57
    ... Financial Reporting The management of Harman International Industries, Incorporated is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system was designed to provide reasonable assurance to our management and Board of Directors...

  • Page 58
    Report of Independent Registered Public Accounting Firm The Board of Directors and Stockholders Harman International Industries, Incorporated: We have audited Harman International Industries, Incorporated and subsidiaries' (the Company) internal control over financial reporting as of June 30, 2008,...

  • Page 59
    ... with the standards of the Public Company Accounting Oversight Board (United States), Harman International Industries, Incorporated's internal control over financial reporting as of June 30, 2008, based on criteria established in Internal Control - Integrated Framework issued by the Committee of...

  • Page 60
    ...; none issued and outstanding Common stock, $.01 par value. Authorized 200,000,000 shares; issued 83,940,927 shares in 2008 and 83,436,983 in 2007 Additional paid-in capital Accumulated other comprehensive income (loss): Unrealized loss on hedging derivatives Pension benefits Cumulative foreign...

  • Page 61
    ...Years Ended June 30, 2007 3,551,144 2,339,938 1,211,206 824,819 386,387 2008 Net sales Cost of sales Gross profit Selling, general and administrative expenses Operating income Other expenses: Interest expense...310 66,449 66,260 68,105 See accompanying notes to consolidated financial statements. 43

  • Page 62
    ...tax benefits from share-based payment arrangements Changes in operating assets and liabilities: Decrease (increase) in: Receivables Inventories... price consideration Proceeds from asset dispositions Capital expenditures Other items, net Net cash used in investing activities Years Ended June 30, 2008 ...

  • Page 63
    ... of Shareholders' Equity and Comprehensive Income Harman International Industries, Incorporated and Subsidiaries Years Ended June 30, 2008, 2007 and 2006 Common Stock Number of shares 66,662,544 - -... Exercise of stock options, net of shares received Tax benefit attributable to stock option plan ...

  • Page 64
    ... to the fiscal 2008 financial statement presentation. Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the...

  • Page 65
    ... for periods ranging from six months to six years from the date of purchase, depending on the business segment and product. Our dealers and warranty service providers normally perform warranty service in field locations and regional service centers, using parts and replacement finished goods we...

  • Page 66
    ... primarily related to infotainment systems that we develop for automobile manufacturers pursuant to long-term supply arrangements. We record certain costs incurred pursuant to these agreements as unbilled costs in accordance with EITF Issue No. 99-5, Accounting for Pre-Production Costs Related to...

  • Page 67
    ... executives designated by the Board of Directors. Certain employees outside the United States are covered by non-contributory defined benefit plans. The defined benefit plans are funded in conformity with applicable government regulations. Generally, benefits are based on age, years of service, and...

  • Page 68
    ...value, but does not expand the use of fair value to new accounting transactions. SFAS 157 is effective for financial assets and liabilities for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. In February 2008, the FASB issued FASB Staff Position (FSP) No...

  • Page 69
    ... costs will be expenses rather than treated as part of the cost of the acquisition and included in the amount recorded for assets acquired. SFAS 141R applies prospectively to business combinations for which the acquisition date is on or after the first annual reporting period beginning on...

  • Page 70
    ...its cash flows discounted using the issuer's nonconvertible debt borrowing rate at the time of issuance. The equity component would be recognized ...goods Work in process Raw materials and supplies Total 2008 $ 150,634 60,045 179,959 $ 390,638 2007 235,736 52,682 164,738 453,156 Inventories are stated...

  • Page 71
    ... to foreign currency translation and contingent purchase price consideration associated with the acquisition of Innovative Systems GmbH. Our SFAS 142 annual impairment test concluded that goodwill was not impaired as of the test date, April 30, 2008. In fiscal 2007, goodwill increased $22.5 million...

  • Page 72
    ... with the convertible senior notes. Interest expense is reported net of interest income in our consolidated statement of operations. Gross interest expense was $17.9 million, $9.6 million and $25.2 million for the fiscal years ended June 30, 2008, 2007 and 2006 respectively. Interest income...

  • Page 73
    ... the trading period was less than 98% of the product of (1) the closing price of our common stock on such date and (2) the conversion rate on such date; upon the occurrence of specified corporate transactions that are described in the indenture for the Notes; or at any time after June 30, 2012 until...

  • Page 74
    ...,532 ($000s omitted) 2009 2010 2011 2012 2013 Thereafter Total minimum lease payments Less interest Present value of minimum lease payments $ $ Operating lease expense was $50.5 million, $44.3 million and $42.0 million for each of the fiscal years ended June 30, 2008, 2007 and 2006, respectively...

  • Page 75
    ... settlement Permanent differences Tax benefit from export sales and U.S. production activities Change in valuation allowance Change in other tax liabilities Difference between Federal and financial accounting for incentive stock option grants Federal income tax credits Other Total $ 2008 43,569 260...

  • Page 76
    ... tax expense consists of the following: ($000s omitted) Current: Federal State Foreign Deferred: Federal State Foreign Charge in lieu of taxes attributable to tax benefit from employee stock options Total 2008 $ 2,194 400 22,551 25,145 (11,124) --(2,223) (13,347) $ 5,321 17,119 Years ended June...

  • Page 77
    ... for U.S. foreign tax credits. Previously, we did not record the tax benefit of U.S. foreign tax credits resulting from German income tax....Company is legally liable. The tax years that were amended are 2003 through 2006. For fiscal years 2008 and beyond, the Internal Revenue Service has issued...

  • Page 78
    ... for the years ended June 30, 2008, 2007 and 2006, respectively. Option Plan Our 2002 Plan permits the grant of stock options, stock appreciation rights, restricted stock and restricted stock units for up to 6,000,000 shares of our common stock. Shares may be issued as original issuances, treasury...

  • Page 79
    ...to employees. The effect of adopting SFAS No. 123R was not material to our net income for the year ended June 30, 2006, and the cumulative effect of adoption using the modified-prospective method was similarly not material. Prior to fiscal 2006, we recorded compensation expense associated with stock...

  • Page 80
    ... annual dividend Expected term (in years) Risk-free rate Groups of option holders (directors, executives and non-executives) that have similar historical behavior are considered separately for valuation purposes. Expected volatilities are based on historical closing prices of our common stock...

  • Page 81
    ... We granted 330,470 stock options containing a market condition to employees on March 21, 2008. The options vest three years from the date of grant based on a comparison of Harman's total shareholder return ("TSR") to a selected peer group of publicly listed multinational companies. TSR will...

  • Page 82
    ... outside the 2002 Plan. These restricted stock units are accounted for as a liability award and are recorded at the fair value at the end of the reporting period in accordance with the vesting schedule over the three year vesting term. Chief Executive Officer Special Enterprise Value Bonus Our Chief...

  • Page 83
    ...plant in South Africa and a small facility in Massachusetts. Our corporate headquarters is currently transitioning to Stamford, Connecticut. In fiscal 2008, SG&A expenses included $42.2 million for our restructuring program, of which $35.5 million was recorded for employee termination benefits. Cash...

  • Page 84
    ... years of service. In the United States, we have a Supplemental Executive Retirement Plan ("SERP") that provides retirement, death and termination benefits, as defined, to certain key executives designated by the Board of Directors. Our expenses related to the SERP for the years ended June 30, 2008...

  • Page 85
    ... income are as follows: Years ended June 30 2008 2007 $ 13,252 5,517 18,769 (6,822) 11,947 7,484 16,591 24,075 (8,297) 15,778 ($000s omitted) Amounts recorded in accumulated other comprehensive loss Prior service cost Net actuarial loss Income tax benefits related to above items Total recognized...

  • Page 86
    ...omitted) Projected benefit obligation Accumulated benefit obligation Years ended June 30, 2008 2007 $ 130,674 120,058 122,101 66,624 Presented below are the components of net periodic benefit costs: Years ended June 30, ($000s omitted) 2008 2007 Components of net periodic benefit cost: Service cost...

  • Page 87
    ...class, the current long-term U.S. Treasury bond rate, and the current and expected asset allocation strategy to determine the expected long-term rate of return assumptions. The discount rate used for our European pension benefits...2008. The rates used represent the single discount rate equal to the...line...

  • Page 88
    ...to be installed as original equipment by automotive manufacturers. Our automotive products and systems are marketed worldwide under brand names including JBL, Infinity, Harman/Kardon, Becker, Logic 7 and Mark Levinson. Our premium branded audio, video, navigation and infotainment systems are offered...

  • Page 89
    ...reporting segment: Years Ended June 30, 2007 2,492,815 497,673 560,656 3,551,144 ($000s omitted) Net sales: Automotive Consumer Professional Total Operating income (loss): Automotive Consumer Professional Other Total Assets: Automotive Consumer Professional Other Total Goodwill: Automotive Consumer...

  • Page 90
    ... 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...

  • Page 91
    ...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...

  • Page 92
    ... Becker Automotive Systems GmbH. In October 2006 Harman Becker received notice of a complaint filed by Siemens AG against it with the Regional Court in Düsseldorf in August 2006 alleging that certain of Harman Becker's infotainment products including both radio receiver and Bluetooth hands free...

  • Page 93
    ... be reasonably estimated. In 2008, we incurred a cost of $0.6 million due to delayed delivery of product to an automotive customer. Inability to meet performance obligations on new automotive platforms could adversely affect our results of operations and financial condition in future periods. Note...

  • Page 94
    ... changes in rent expenses caused by interest rate fluctuations. The interest rate swap contract is designated as a cash flow hedge. At the end of each reporting period, the discounted fair value of the effective portion of the swap contract is calculated and recorded to other comprehensive income...

  • Page 95
    ...Harman Navis Inc., a joint venture located in Korea, to engage in the design and development of navigation systems...financial statements. Note 21 - Earnings Per Share Information Years Ended June 30, ($000s omitted except per share amounts) 2008... stock outstanding 61,472 61,472 Employee stock options...

  • Page 96
    ... of our management, including our Chief Executive Officer and Chief Financial Officer, we have...recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms. We note that the design of any system of controls is based in part...

  • Page 97
    ... 13. Certain Relationships and Related Transactions, and Director Independence The information required by Item 13 of Part III is incorporated by reference to our Proxy Statement for the 2008 Annual Meeting of Stockholders. Item 14. Principal Accountant Fees and Services The information required by...

  • Page 98
    ... over Financial Reporting Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of June 30, 2008 and 2007 Consolidated Statements of Operations for the years ended...

  • Page 99
    ...10.4 10.5 10.6 10.7 10.8 Certificate of Designation of Series A Junior Participating Preferred Stock of Harman International Industries, Incorporated, dated January 11, 2000. (filed as Exhibit 4.3 to the Annual Report on Form 10-K for the fiscal year ended June 30, 2000, Commission File No. 001...

  • Page 100
    ... incorporated by reference) ** Form of Harman International Industries, Incorporated 2002 Stock Option and Incentive Plan Nonqualified Stock Option Agreement for Non-Officer Directors. (filed as Exhibit 10.11 to the Annual Report on Form 10-K for the fiscal year ended June 30, 2005, Commission File...

  • Page 101
    ... and Herbert Parker. (filed as Exhibit 10.1 to the Current Report on Form 8-K filed with the Commission on July 31, 2008, Commission File No. 001-09764, and hereby incorporated by reference)** Employment Agreement between Harman Management GmbH and Helmut Schinagel. (filed as Exhibit 10.1 to the...

  • Page 102
    ... 10.19 to the Annual Report on Form 10-K for the fiscal year ended June 30, 2006, Commission File No. 001-09764, and hereby incorporated by reference) ** Letter Agreement, dated August 26, 2008, between Harman International Industries, Incorporated and Kevin Brown. **+ Benefit Agreement of Kevin...

  • Page 103
    ..., the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED Date: August 29, 2008 By: /s/ Dinesh Paliwal Dinesh Paliwal Chairman and Chief Executive Officer Pursuant to the requirements of the...

  • Page 104
    /s/ Kenneth Reiss Kenneth Reiss Director /s/ Gary Steel Gary Steel Director 86

  • Page 105
    ... Valuation and Qualifying Accounts and Reserves Years Ended June 30, 2008, 2007 and 2006 ($000s omitted) Classification Balance at beginning of period Charged to costs and expenses Charged to other accounts Deductions Balance at end of period Year ended June 30, 2006 Allowance for doubtful...

  • Page 106
    ...for the five-year period ending June 30, 2008 against the S&P Composite-500 Stock Index and the S&P 500 Consumer Discretionary Index. The stock price performance graph assumes an initial investment of $100 at the market close on June 30, 2003. Dates on the chart represent the last trading day of the...

  • Page 107
    ... certifications of our Chief Executive Officer and Chief Financial Officer required under Section 302 of the Sarbanes-Oxley Act have been filed as Exhibits 31.1 and 31.2 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2008. Additionally, in 2007 our Chief Executive Officer...

  • Page 108
    400 Atlantic Street, Suite 1500 Stamford, CT 06901 203 ฀328 ฀3500 www.harman.com 8dkZg/;Vb^an^c[diV^cbZci^ci]ZBZgXZYZh"7ZcoH"8aVhh 6WdkZ/EgZb^jbhdjcYViGdnVa6aWZgi=Vaa!AdcYdc