Harman Kardon 2008 Annual Report Download - page 83

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65
Note 14 - Restructuring Program
We announced a restructuring program in June 2006 designed to increase efficiency in our
manufacturing, engineering and administrative organizations. The implementation of this program
continued through fiscal years 2007 and 2008.
During the third quarter of fiscal of fiscal 2008, we expanded our restructuring actions to improve global
footprint, cost structure, technology portfolio, human resources, and internal processes. These programs
will reduce the number of our manufacturing, engineering and operating locations.
We have announced plant closings in Northridge, California and Martinsville, Indiana. We have also
closed a plant in South Africa and a small facility in Massachusetts. Our corporate headquarters is
currently transitioning to Stamford, Connecticut.
In fiscal 2008, SG&A expenses included $42.2 million for our restructuring program, of which $35.5
million was recorded for employee termination benefits. Cash paid for these initiatives was $14.1
million. In addition, we have recorded $3.8 million of accelerated depreciation in cost of sales in
accordance with SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets.
Below is a rollforward of our restructuring accrual for the fiscal years June 30, 2008, 2007 and 2006,
accounted for in accordance with SFAS 88, SFAS 112 and SFAS 146:
June 30, June 30, June 30,
($000s omitted) 2008 2007 2006
Beginning accrued liability $ 7,527 8,533 ---
Expense 42,192 7,071 9,499
Utilization (14,118) (8,077) (966)
Ending accrued liability $ 35,601 7,527 8,533
Restructuring expenses by reporting segment are as follows:
Years ended June 30
,
($000s omitted) 2008 2007 2006
Automotive $ 24,677 5,670 7,337
Consumer 8,668 1,034 422
Professional 6,023 367 1,740
Other 2,824 --- ---
Total $ 42,192 7,071 9,499
Note 15 - Merger costs
On October 22, 2007, we announced the termination of our agreement with KKR and GSCP and
companies formed by investment funds affiliated with KKR and GSCP. In fiscal 2008, we incurred $13.8
million of legal and advisory services expenses associated with the merger, which is included in selling,
general and administrative expenses in our consolidated statement of operations.