Harman Kardon 2008 Annual Report Download - page 35

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17
On March 24, 2008, the Court ordered, for pretrial management purposes only, the consolidation of
Patrick Russell v. Harman International Industries, Incorporated, et al. with In re Harman International
Industries Inc. Securities Litigation .
On May 2, 2008, Lead Plaintiff filed a Consolidated Class Action Complaint (the “Consolidated
Complaint”). The Consolidated Complaint, which extends the Class Period through February 5, 2008,
contends that the Company and certain of its officers and directors violated Sections 10(b) and 20(a) and
Rule 10b-5 by issuing false and misleading disclosures regarding the Company’s financial condition in
fiscal 2007 and fiscal 2008. In particular, the Consolidated Complaint alleges that defendants knowingly
or recklessly failed to disclose material adverse facts about MyGIG radios, PNDs and the Company’s
capital expenditures. The Consolidated Complaint alleges that when the Company’s true financial
condition became known to the market, the price of the Company’s stock declined significantly, causing
losses to the plaintiff class.
On July 3, 2008, defendants moved to dismiss the Consolidated Complaint in its entirety.
We believe the lawsuit, which is still in its earliest stages, is without merit and we intend to vigorously
defend against it.
Patrick Russell v. Harman International Industries, Incorporated, et al.
Patrick Russell (the “Russell Plaintiff”) filed a complaint 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”) and seeking, on behalf of all participants in and
beneficiaries of the Harman International Industries, Incorporated Retirement Savings Plan (“the Plan”),
compensatory damages for losses to the Plan as well as injunctive relief, constructive trust, restitution,
and other monetary relief. The amended complaint alleges that from April 26, 2007 to the present,
defendants failed to prudently and loyally manage the Plan’s assets, thereby breaching their fiduciary
duties in violation of ERISA, by causing the Plan to invest in Company stock notwithstanding that the
stock allegedly was “no longer a prudent investment for the Participants’ retirement savings.” The
amended complaint further claims that, during the Class Period, defendants failed to monitor the Plan
fiduciaries, and failed to provide the Plan fiduciaries with, and to disclose to Plan participants, adverse
facts regarding the Company and its businesses and prospects. The Russell Plaintiff also contends that
defendants breached their duties to avoid conflicts of interest and to serve the interests of participants in
and beneficiaries of the Plan with undivided loyalty. As a result of these alleged fiduciary breaches, the
complaint asserts that the Plan has “suffered substantial losses, resulting in the depletion of millions of
dollars of the retirement savings and anticipated retirement income of the Plan’s Participants.”
On March 24, 2008, the Court ordered, for pretrial management purposes only, the consolidation of
Patrick Russell v. Harman International Industries, Incorporated, et al. with In re Harman International
Industries Inc. Securities Litigation.
Defendants moved to dismiss the complaint in its entirety on August 5, 2008.