Harman Kardon 2008 Annual Report Download - page 28

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10
Our products may not satisfy shifting consumer demand or compete successfully with competitors’
products.
Our business is based on the demand for audio and video products and our ability to introduce distinctive
new products that anticipate changing consumer demands and capitalize upon emerging technologies. If
we fail to introduce new products, misinterpret consumer preferences or fail to respond to changes in the
marketplace, consumer demand for our products could decrease and our brand image could suffer. In
addition, our competitors may introduce superior designs or business strategies, impairing our distinctive
image and our products’ desirability. If any of these events occur, our sales could decline.
A decrease in discretionary spending would likely reduce our sales.
Our sales are dependent on discretionary spending by consumers, which may be adversely impacted by
economic conditions affecting disposable consumer income 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 a multi-function digital infotainment system.
Our business could be adversely affected if we are unable to obtain raw materials and components
from our suppliers on favorable terms.
We are dependent upon third party suppliers, both in the United States and other countries, for various
components, parts, raw materials and finished products. Some of our suppliers may produce products that
compete with our products. We use externally sourced microchips in many of our products. A significant
disruption in our supply chain and an inability to obtain alternative sources could have a material impact
on our consolidated results of operations.
Failure to deliver products on time to our automotive customers could adversely affect our financial
results.
We have products in various stages of development for our automotive customers. If we do not complete
our development efforts in time to meet our customers’ vehicle production requirements, we could be
subject to monetary penalties and damage our customer relationships, which could have a material
adverse effect on our consolidated sales, earnings and financial condition.
Our business could be adversely affected by a strike or work stoppage at one of our manufacturing
plants or at a facility of one of our significant customers or at a common carrier or major shipping
location.
Certain of our automotive customers are unionized and may incur work stoppages or strikes. A work
stoppage at our facilities or those of our automotive customers could have a material adverse effect on our
consolidated sales, earnings and financial condition. In addition, a work stoppage at a common carrier or
a major shipping location could also have a material adverse effect on our consolidated sales, earnings
and financial condition.