Harman Kardon 2008 Annual Report Download - page 74

Download and view the complete annual report

Please find page 74 of the 2008 Harman Kardon annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 108

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108

56
We do not believe that it is probable that we will not comply with the Registration Rights
Agreement. Therefore, no liability has been recorded for the additional interest that may be required in
the event of non-compliance.
Note 8 - Leases
The following analysis represents property under capital leases:
June 30,
($000s omitted) 2008 2007
Ca
p
ital lease assets
$
8
,
103 6
,
982
Less accumulated amortization (5,695) (4,629)
Net $2,408 2,353
At June 30, 2008, we are obligated for the following minimum lease commitments under terms of
noncancelable lease agreements:
Capital Operating
($000s omitted) Leases leases
2009 $ 610 $ 43,776
2010 613 38,104
2011 490 29,002
2012 479 18,295
2013 --- 18,367
Thereafter --- 33,988
Total minimum lease payments 2,192 $ 181,532
Less interest (107)
Present value of minimum lease payments $2,085
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.
Note 9 - 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 conversion feature of our
convertible debt was valued using the Black-Scholes option pricing model.