Harman Kardon 2008 Annual Report Download - page 78

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provisions allowed in the tax law, we may recognize $1.2 million in unrecognized tax benefits within the
next 12 months.
We recognize interest and penalties related to unrecognized tax benefits in income tax expense. As of
June 30, 2008, the amount accrued for interest and penalties was $1.3 million.
Cash paid for Federal, state and foreign income taxes were $129.1 million, $144.7 million and $135.7
million, during fiscal years ended June 30, 2008, 2007 and 2006, respectively.
Accrued income taxes payable was $21.9 million and $90.1 million at June 30, 2008 and 2007,
respectively. At June 30, 2008, we also had a tax receivable recorded in other current assets of $44.6
million relating to an overpayment of fiscal year 2008 estimated income taxes by our German subsidiary.
A net deferred tax asset of $42.7 million and $202.3 million was recorded in other current assets and
other assets, respectively, on the consolidated balance sheet at June 30, 2008. A deferred tax asset of
$44.6 million and $184.6 million was recorded in other current assets and other assets, respectively, on
the consolidated balance sheet at June 30, 2007.
We generated income before income taxes of $143.6 million, $353.1 million and 315.5 million from our
international operations during the fiscal years ended June 30, 2008, 2007 and 2006, respectively.
Note 12 - Stock Option and Incentive Plan
On June 30, 2008, we had one share-based compensation plan with shares available for future grants, the
2002 Stock Option and Incentive Plan (“the 2002 Plan”), which is described below. The compensation
expense for share-based compensation was $23.1 million, $15.4 million and $16.6 million for the years
ended June 30, 2008, 2007 and 2006, respectively. The total income tax benefit recognized in the income
statement for share-based compensation arrangements was $5.6 million, $4.5 million and $4.8 million 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 shares or a combination of both. We believe that such awards better align the interests of our
employees with those of our stockholders. Option awards are granted with an exercise price equal to the
market price of our stock on the date of the grant. The option awards generally vest over five years of
continuous service commencing one year from the date of the grant and expire after ten years. At June 30,
2008, a total of 3,073,041 shares of common stock were available for grant under the 2002 Plan.
A grant of restricted stock involves the immediate transfer of ownership of a specified number of shares
of common stock with a “substantial risk of forfeiture” for a period of at least three years. A participant
who receives a restricted stock grant is entitled immediately to voting, dividend and other share
ownership rights associated with the underlying shares of common stock. At June 30, 2008, a total of
92,910 shares of restricted stock were outstanding, of which 43,331 shares were granted under the 2002
Plan and 49,579 shares were granted outside of the 2002 Plan.