Harman Kardon 2008 Annual Report Download - page 52

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34
million from our foreign subsidiaries under the “American Jobs Creation Act of 2004.” This decision
resulted in a $3.4 million tax charge.
Financial Condition
Liquidity and Capital Resources
We primarily finance our working capital requirements through cash generated by operations, borrowings
under revolving credit facilities and trade credit, if needed. During fiscal 2008, cash was primarily used
to make investments in our manufacturing facilities, make tax payments, primarily in Germany, and meet
our working capital needs. Cash and cash equivalents were $223.1 million at June 30, 2008 compared to
$106.1 million at June 30, 2007.
We will continue to have cash requirements to support seasonal working capital needs, investments in our
manufacturing facilities, interest and principal payments, and dividend payments. We intend to use cash
on hand, cash generated by operations and borrowings under our revolving credit facility to meet these
requirements. We believe that cash from operations and our borrowing capacity, if needed, will be
adequate to meet our normal cash requirements over the next twelve months.
Below is a more detailed discussion of our cash flow activities during fiscal 2008.
Operating Activities
Net cash provided by operating activities in fiscal 2008 was $316.8 million compared to $215.3 million in
fiscal 2007. The increase in operating cash flows was primarily due to improved working capital
management. Inventories were reduced significantly in fiscal 2008 despite 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 an acquisition made several years ago. Capital
expenditures were $138.9 million in fiscal 2008 and $174.8 million in fiscal 2007. During fiscal 2008,
we invested in customer tooling and other manufacturing equipment to support infotainment system
programs for automotive customers. In addition, we made machinery and equipment investments in our
new manufacturing facility in China. Capital expenditures were also used for new product tooling for
consumer and professional products.
In fiscal 2007, we invested in the necessary equipment and tooling to begin production of infotainment
systems in our Washington, Missouri facility. This facility was substantially complete at the end of fiscal
2006 but required additional investments in customer tooling equipment in fiscal 2007 to ramp-up
production for Chrysler.
We expect capital expenditures in fiscal 2009 to approximate fiscal 2008 levels.