Harman Kardon 2009 Annual Report Download

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Table of contents

  • Page 1

  • Page 2
    Touching lives with premium audio and infotainment 2009 Annual Report

  • Page 3
    ... innovation and premium quality. Our customers include the top names in entertainment, automotive and venue design - linked by a common passion for high-fidelity sound and multimedia, We operate worldwide through a network of more than 9,500 talented employees and best-in-class channel partners...

  • Page 4
    Financial Highlights FIVE-YEAR SUMMARY (in thousands, except per share data, for the fiscal years ended June 30) 05 Net sales Operating (loss) income (Loss) income before income taxes Net (loss) income Diluted (loss) earnings per share Weighted average shares outstanding: Diluted Total assets ...

  • Page 5
    Harman International Group Executive Committee Left to right: Herbert Parker - Executive Vice President and Chief Financial Officer; Todd Suko - Vice President, General Counsel and Secretary; Sachin Lawande Chief Technology Officer; Blake Augsburger President, Professional Audio Division; David ...

  • Page 6
    ... FROM THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER Fiscal Year 2009 was a time of both extraordinary challenge and accomplishment for Harman International. We experienced the deepest global economic crisis of a lifetime, while launching a record number of new audio and infotainment platforms to start...

  • Page 7
    ... audio, navigation, infotainment and driver assistance. Our innovative products helped automakers earn numerous honors during Fiscal Year 2009, including the Harman equipped Hyundai™ Genesis Sedan which was named 2009 North American Car of the Year at the Detroit Auto Show and the BMW® 7-Series...

  • Page 8
    ... to profitable growth. Hard work remains, as does Harman's commitment to delivering sustainable, long-term value to our shareholders and we are grateful for your support. Best regards, Dinesh C. Paliwal Chairman, President and Chief Executive Officer Harman International Annual Report 2009 5

  • Page 9

  • Page 10
    ...Sedan, equipped with premium Harman audio systems, was voted North American 2009 Car of the Year during the Detroit Auto Show. (above left) Our new interactive Amplified Journeys Web site blends mapping information with an extensive online music library, letting drivers download a playlist tailored...

  • Page 11

  • Page 12
    ... and portable audio products for young women, co-developed with our popular JBL® brand. (above left) JBL's new On Tour™ XTB sound center allows wireless connection to any Bluetooth® enabled mobile phone or music player for high-fidelity entertainment or hands-free conversations. (above middle...

  • Page 13

  • Page 14
    ...design of Harman professional systems. We support the entertainment, sport and broadcast industries with premium microphones, amplifiers, speakers, headphones, mixing consoles and more. Our exclusive HiQnet networking protocol ensures easy integration and control across the largest systems. Harman...

  • Page 15
    ... and systems integration expertise is helping to deliver a seamless audio and infotainment experience across the consumer, professional and automotive markets. Car Interface Synthesis Controller SAFE SOUND Speakers Throttle Position Sensor Amplifier (above left) Harman's new GreenEdgeâ„¢ audio...

  • Page 16
    UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2009 Commission File Number 001-09764 Harman International Industries, Incorporated (Exact ...

  • Page 17
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  • Page 18
    .... Controls and Procedures ...Item 9B. Other Information ...Part III Item 10. Item 11. Item 12. Item 13. Item 14. Part IV Item 15. Directors, Executive Officers and Corporate Governance ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management and Related Stockholder...

  • Page 19
    ...administrative organizations; model-year changeovers and customer acceptance in the automotive industry; our ability to enforce or defend our ownership and use of intellectual property; our ability to maintain a competitive technological advantage within the systems, services and products we provide...

  • Page 20
    ... at our facilities, or at a facility of one of our significant customers; or work stoppages at a common carrier or a major shipping location; commodity price fluctuations; availability of key components for the products we manufacture, and the outcome of pending or future litigation and other claims...

  • Page 21
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  • Page 22
    ... control and night vision. Our Automotive products are marketed worldwide under brand names including JBL, Infinity, Mark Levinson, Harman/Kardon, Logic 7, Lexicon and Becker. We also have an exclusive alliance with Bowers & Wilkins to develop, manufacture, sell or service premium audio systems...

  • Page 23
    ... winning design and high fidelity. Aftermarket mobile products include speakers that deliver high-quality in-car audio. Our Consumer products are sold in specialty audio stores, mass-market retail stores such as the Apple stores, Best Buy, Target, Media Markt and Fnac, and through online retailers...

  • Page 24
    ... with automotive manufacturers through an increase in the number of models offering our audio, navigation and infotainment systems; increases in per-vehicle content through the provision of integrated infotainment and premium branded audio systems; higher penetration levels of high-level audio and...

  • Page 25
    ... JBL and Infinity branded audio systems in the Korean and United States markets, respectively. We also sell PNDs, primarily in Europe. Consumer We manufacture loudspeakers under the Harman/Kardon, Infinity and JBL brand names for the consumer home audio market. These loudspeaker lines include models...

  • Page 26
    ... Levinson brand names. Our Harman/Kardon home electronics line includes audio/video receivers featuring Logic 7, Dolby Digital and DTS surround sound processing capabilities and multi-channel amplifiers, DVD players and CD players. In the multimedia market, we offer branded iPod® docking devices...

  • Page 27
    ... microphone to speaker on one unified digital network. This system provides enhanced productivity and facilitates real-time problem diagnosis and correction from a central location. We design high-end electronics, including amplifiers, digital signal processors, multi format digital media players...

  • Page 28
    ...brands include JBL,® Infinity,® Harman/Kardon,® Lexicon,® Mark Levinson,® Revel,® Crown,® Becker,® Soundcraft,® Spirit,® DigiTech,® AKG,® Studer® BSS® and dbx.® Our trademark registrations cover use of trademark rights in connection with various products, such as loudspeakers, speaker...

  • Page 29
    ... market include Bose, Klipsch, Polk Audio, Bowers &Wilkins and Boston Acoustics. Competition in the consumer home electronics market remains intense and is dominated by large Asian manufacturers. This market is characterized by the short life cycle of products and a need for continuous design and...

  • Page 30
    ...Audio Research, Meridian, Linn and Classe. In the multimedia market, we supply Apple stores and other retailers with JBL and Harman/Kardon speaker systems that serve Apple's iPod and iPhone as well as other MP3 players. Our principal competitors for these products are Bose, Altec Lansing and Klipsch...

  • Page 31
    ... competitive position. Number of Employees At June 30, 2009, we had 9,482 full-time employees, including 3,407 employees located in North America and 6,075 located outside of North America. Corporate Information We were incorporated in the state of Delaware in 1980. Our principal executive offices...

  • Page 32
    ... products to automotive customers are dependent on the overall success of the automobile industry, and the success of premium automobiles in particular, as well as the willingness of automobile purchasers to pay for the option of a premium branded automotive audio system or a multi-function digital...

  • Page 33
    ... Mercedes business declined in fiscal year 2008 and has further declined in fiscal year 2009. We cannot assure you that our customers will not further expand dual sourcing arrangements in the future. Failure to deliver products on time to our automotive customers could adversely affect our financial...

  • Page 34
    ... by intense price competition. Many manufacturers, large and small, domestic and foreign, offer audio and video systems that vary widely in price and quality and are marketed through a variety of channels, including audio and video specialty stores, discount stores, department stores, mail order...

  • Page 35
    ... incur debt for working capital, capital expenditures, debt service requirements or other corporate purposes; use a substantial portion of proceeds from sales of debt, equity or assets to fund working capital, capital expenditures, product development and other corporate requirements; create or...

  • Page 36
    ..., patent applications, trademarks and other proprietary rights and prosecution of our claims could be time consuming and costly. In addition, the intellectual property laws of some foreign countries do not protect our proprietary rights, as do the laws of the United States. Despite our efforts...

  • Page 37
    ... diversion of our management's time and attention away from our business. We have deferred tax assets in our consolidated financial statements. Our consolidated financial statements include deferred tax assets of $324.8 million as of June 30, 2009, which relate to temporary differences (differences...

  • Page 38
    ...") against Harman International and certain of our officers in the United States District Court for the District of Columbia (the "Court") seeking compensatory damages and costs on behalf of all persons who purchased our common stock between April 26, 2007 and September 24, 2007 (the "Class Period...

  • Page 39
    ... alleged in the original complaint, Harman International also violated Sections 10(b) and 20(a) of the 1934 Act and Rule 10b-5 by "knowingly failing to disclose "significant problems" relating to its portable navigation device ("PND") sales forecasts, production, pricing, and inventory" prior to...

  • Page 40
    ... 2006, Harman Becker Automotive Systems GmbH ("Harman Becker") received notice of a complaint filed against it by Siemens AG with the Regional Court in Düsseldorf in August 2006 alleging that certain of Harman Becker's infotainment products, including both radio receiver and Bluetooth hands free...

  • Page 41
    ... also serves as Country Manager for North America. Prior to joining our Company, he was Corporate Vice President and General Manager for Hubbell High Voltage Test Businesses from 1999 to 2001. Klaus Blickle joined the Company in July 2008 as Chief Executive Officer of our Automotive division. Prior...

  • Page 42
    ... center in India as part of Harman's strategy for optimizing its global footprint. From 2001 through 2006 he served in various positions with QNX Software Systems, most recently as Vice President, Engineering Services. David Slump joined our Company in February 2009 as President, Consumer Audio...

  • Page 43
    ... 127 record holders of our common stock. The table below sets forth the reported high and low sales prices for our common stock, as reported on the New York Stock Exchange, for each quarterly period for fiscal years ended June 30, 2009 and 2008. Years Ended June 30, 2009 2008 High Low High Low...

  • Page 44
    ...conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and the audited Consolidated Financial Statements and the Notes to the Consolidated Financial Statements. (In thousands except per share data) 2009 2008 2007 2006 2005 Net sales ...Operating (loss...

  • Page 45
    ... leader in digitally integrated infotainment systems for the automotive industry. Our AKG, Crown, JBL, Infinity, Harman/Kardon, Lexicon, dbx, Studer/Soundcraft, Mark Levinson and Becker brand names are well-known worldwide for premium quality and performance. We have built these brands by developing...

  • Page 46
    ... in this discussion. Recent Events Issuance of Common Stock On June 23, 2009, we completed a public offering of 10,667,000 shares of our common stock at the offering price of $18.75 per share, less a 4.75 percent underwriting discount. We received cash proceeds of $189.8 million, net of expenses...

  • Page 47
    ...weighted average cost of capital, and relevant market data. During the fiscal year ended June 30, 2009, we determined that goodwill related to our Automotive, Consumer and QNX reporting units was impaired and we recognized an impairment charge of $330.6 million. Goodwill was $81.9 million at June 30...

  • Page 48
    ... six months to six years from the date of purchase, depending on the business segment and product. Our dealers and warranty service providers normally perform warranty service in field locations and regional service centers, using parts and replacement finished goods we supply on an exchange basis...

  • Page 49
    ... value of stock options and similar equity instruments awarded to employees. Refer to Note 11 - Shareholders' Equity and Share-Based Compensation in the Notes to the Consolidated Financial Statements for additional information. Results of Operations Net Sales Fiscal year 2009 net sales were $2.891...

  • Page 50
    ...to Mercedes due to reduced E-Class production and price reductions. Aftermarket sales of PNDs in fiscal year 2008 were also lower than the prior year and may continue to decline as a result of our decision to focus exclusively on the automotive aftermarket premium sector. Consumer-Consumer net sales...

  • Page 51
    ... control complex audio systems. JBL Professional had strong sales of products supporting the install, portable and tour sound markets. Harman Music Group had higher sales due to new product introductions. AKG sales of headphones and microphones were higher than in the prior year. Additionally, sales...

  • Page 52
    ...mid-level vehicles. We also had lower sales to Mercedes due to a decrease in production for the E-Class and price reductions. Historically, sales of these high-level infotainment systems generated higher margins for our Automotive division. In fiscal year 2008, our warranty liabilities increased $77...

  • Page 53
    ...net sales in the prior year. The increase in R&D costs in fiscal year 2008 when compared to the prior year was primarily due to increased costs to support infotainment system programs for our Automotive customers. We continue to incur costs relating to our restructuring program, which is designed to...

  • Page 54
    ... of sales in the prior year. Higher costs were incurred to develop and support 13 major audio and infotainment platforms in fiscal year 2008 a record number for the division. Consumer-Consumer SG&A expenses decreased $17.5 million to $110.3 million in fiscal year 2009 compared to the prior year. As...

  • Page 55
    ... sales. The most significant of these programs were in Germany, Austria, the United Kingdom and various locations in the United States. In fiscal year 2009, we recorded $90.1 million for our restructuring program, primarily within SG&A, of which $74.9 million related to employee termination benefits...

  • Page 56
    ..., and expenses related to the merger termination. Presented below is a summary of our operating (loss) income by business segment: Percentage of Net Sales Year Ended June 30, Percentage of Net 2008 Sales Percentage of Net Sales ($ in thousands) 2009 2007 Automotive ...$(439,957) Consumer ...(49...

  • Page 57
    ... our revolving credit facility, cash generated by operations, and trade credit. In fiscal year 2009, we also received additional financing to fund our working capital requirements with the net proceeds from the public offering of our common stock. Cash and cash equivalents were $590.6 million and...

  • Page 58
    ... year 2009, compared to $142.5 million in fiscal year 2008. The fiscal year 2009 activity primarily reflects investments in our manufacturing facilities and contingent purchase price consideration related to an acquisition made several years ago, partially offset by proceeds received from the sale...

  • Page 59
    ...loans. In addition, the annual facility fee rate payable under...been capitalized within other current assets and other assets...public offering of common stock, described in Note 11 - Shareholder's Equity and Share-Based Compensation in the Notes to the Consolidated Financial Statements, on June 15, 2009...

  • Page 60
    ...Current Assets is defined as 70 percent of net book value of accounts receivable... the sale of certain... 2009, we were in compliance with all the financial ... 31, 2011. Under the...GSCP and companies formed by ...stock per $1,000 principal amount of the Notes (which is equal to an initial conversion price...

  • Page 61
    ... of the trading period was less than 98 percent of the product of (1) the closing price of our common stock on such date and (2) the conversion rate on such date; upon the occurrence of specified corporate transactions that are described in the Indenture; or at any time after June 30, 2012 until the...

  • Page 62
    ... cost improvement and productivity program called STEP Change. This program is designed to yield $400 million in sustainable savings by fiscal year 2011. We have accelerated the timing of severance actions in order to help us improve our cost structure to enable us to remain competitive and mitigate...

  • Page 63
    ... have an impact on our reported results when the financial statements of foreign subsidiaries are translated into U.S. Dollars. Over half our sales are denominated in Euros. The average exchange rate for the Euro versus the U.S. Dollar for the year ended June 30, 2009 decreased 6.8 percent from the...

  • Page 64
    Competitive conditions in the markets in which we operate may limit our ability to increase prices in the event of adverse changes in currency exchange rates. For example, certain products made in Europe are sold in the U.S. Sales of these products are affected by the value of the U.S. dollar ...

  • Page 65
    ... Financial Reporting The management of Harman International Industries, Incorporated is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system was designed to provide reasonable assurance to our management and Board of Directors...

  • Page 66
    Report of Independent Registered Public Accounting Firm The Board of Directors and Stockholders Harman International Industries, Incorporated: We have audited Harman International Industries, Incorporated and subsidiaries' ("the Company") internal control over financial reporting as of June 30, 2009...

  • Page 67
    ... with the standards of the Public Company Accounting Oversight Board (United States), Harman International Industries, Incorporated's internal control over financial reporting as of June 30, 2009, based on criteria established in Internal Control-Integrated Framework issued by the Committee of...

  • Page 68
    CONSOLIDATED BALANCE SHEETS HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES June 30, (in thousands) 2009 2008 Assets Current assets Cash and cash equivalents ...Receivables, net ...Inventories, net ...Other current assets ...Total current assets ...Property, plant and equipment, net ...

  • Page 69
    CONSOLIDATED STATEMENTS OF OPERATIONS HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES (in thousands, except per share data) 2009 Year Ended June 30, 2008 2007 Net sales ...Cost of sales ...Gross profit ...Selling, general and administrative expenses ...Goodwill impairment ......

  • Page 70
    ...770 23,148 15,418 Excess tax benefits from share-based payment arrangements ...(126) (5,321) (10,456) Changes in operating assets and liabilities: Decrease (increase) in: Receivables ...119,096 (34,980) (20,314) Inventories ...27,756 102,451 (92,024) Other current assets ...64,036 (55,950) (34,844...

  • Page 71
    ... ...10,667,000 Exercise of stock options, net of shares received ...144,712 Excess tax benefit from stock option exercise ...- Share-based compensation ...- Dividends ($0.05 per share) ...- Deferred taxes relating to share-based compensation ...- Balance, June 30, 2009 ...69,329,778 $949 $1,141...

  • Page 72
    ...leader in digitally integrated infotainment systems for the automotive industry. Our AKG, Crown, JBL, Infinity, Harman/Kardon, Lexicon, dbx, Studer/ Soundcraft, Mark Levinson and Becker brand names are well-known worldwide for premium quality and performance. We have built these brands by developing...

  • Page 73
    ...at the time of product shipment or delivery, depending on when the passage of title to goods transfers to unaffiliated customers, when all of the following have occurred: a firm sales agreement is in place, pricing is fixed or determinable and collection is reasonably assured. Sales are reported net...

  • Page 74
    ... six months to six years from the date of purchase, depending on the business segment and product. Our dealers and warranty service providers normally perform warranty service in field locations and regional service centers, using parts and replacement finished goods we supply on an exchange basis...

  • Page 75
    ... primarily related to infotainment systems that we develop for automobile manufacturers pursuant to long-term supply arrangements. We record certain costs incurred pursuant to these agreements as unbilled costs in accordance with EITF Issue No. 99-5, "Accounting for Pre-Production Costs Related to...

  • Page 76
    ... key executives designated by the Board of Directors. Certain employees outside the United States are covered by non-contributory defined benefit plans. The defined benefit plans are funded in conformity with applicable government regulations. Generally, benefits are based on age, years of service...

  • Page 77
    ... Currency Management: The fair value of foreign currency related derivatives is included in the Consolidated Balance Sheets in other current assets and accrued liabilities. The earnings impact of cash flow hedges relating to forecasted purchases of inventory is reported in cost of sales to match...

  • Page 78
    ...' equity. Retirement of Treasury stock is recorded as a reduction of Common stock and Additional paid-in-capital at the time such retirement is approved by our Board of Directors. Recently Adopted Accounting Pronouncements: Subsequent Events: In May 2009, the FASB issued SFAS No. 165, "Subsequent...

  • Page 79
    ... by the SEC. This statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009. We will adopt SFAS 168 on July 1, 2009 and will update all disclosures to reference the Codification in our Quarterly Report on Form 10-Q for the quarterly period...

  • Page 80
    ... financial statements. Fair Value: In April 2009, the FASB issued FSP FAS 157-4, "Determining Fair Value When the Volume ...Financial Instruments" by requiring disclosures about fair value of financial instruments for interim reporting periods of publicly-held companies, as well as in annual financial...

  • Page 81
    ...the two-class method. This FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those years. Upon adoption, a company is required to retrospectively adjust its earnings per share data (including any amounts related to interim...

  • Page 82
    ... usage data, forecast demand data and historical disposal rates. Specific product valuation analysis is applied, if practicable, to those items of inventory representing a higher portion of the value of inventory on-hand. At June 30, 2009 and 2008 our inventory reserves were $91.5 million and...

  • Page 83
    ... noted above, all goodwill relating to the Consumer reporting unit was impaired in the second quarter of fiscal year 2009. As such, no further goodwill impairments were possible for the Consumer reporting unit. The Automotive reporting unit, however, had recorded additional goodwill during the third...

  • Page 84
    ... indicated that the fair value of each reporting unit was in excess of its carrying value and, as such, no impairment was deemed to exist. The changes in the carrying amount of goodwill for the year ended June 30, 2009 were as follows: Automotive Consumer Professional Other Total Balance at June 30...

  • Page 85
    ... the next five fiscal years and thereafter is as follows: 2010 ...2011 ...2012 ...2013 ...2014 ...Thereafter ...Total ...$ 605 524 227,851 400,110 115 254 $629,459 Borrowings Under Revolving Credit Facility On March 31, 2009 we and one of our wholly-owned subsidiaries, Harman Holding GmbH & Co. KG...

  • Page 86
    ... from 50 percent to 20 percent for a limited period of time ending on June 30, 2009. The Equity Prepayment Percentage is the amount, expressed as a percentage, of net cash proceeds received from the public offering of our common stock that we had to repay under the revolving credit facility. As...

  • Page 87
    Harman International Industries, Incorporated and Subsidiaries (Dollars in thousands, except per-share data and unless otherwise indicated) • The ratio of Consolidated Current Assets to Secured Funded Debt must be equal to or less than 1:00 to 1:00. Consolidated Current Assets is defined as 70 ...

  • Page 88
    ... of the trading period was less than 98 percent of the product of (1) the closing price of our common stock on such date and (2) the conversion rate on such date; upon the occurrence of specified corporate transactions that are described in the Indenture; or at any time after June 30, 2012 until the...

  • Page 89
    ...price risk associated with foreign denominated forecasted purchases of materials used in our manufacturing process and to manage currency risk associated with operating costs in certain operating units. These contracts generally mature in one year or less. A portion of these contracts are designated...

  • Page 90
    ... Represents the net receivable/(payable) included in the Consolidated Balance Sheet. Cash Flow Hedges We designate a...relating to the change in forward points that is recorded to current earnings as miscellaneous, net. For the year ended June 30, 2009, we recognized $2.4 million in net gains related...

  • Page 91
    ... contracts, we recognize the gain or loss on the associated contracts directly in current period earnings in cost of sales, in our Consolidated Statements of Operations, as unrealized exchange gains/(losses). As of June 30, 2009, we had $116.0 million of forward contracts maturing through February...

  • Page 92
    ... our derivative instruments that are not designated as hedging instruments for the year ended June 30, 2009: Derivative Location of Derivative Gain/(Loss) Year Ended June 30, 2009 Foreign exchange contracts-forwards ...Note 8 - Fair Value Measurements Cost of sales $287 In the first quarter of...

  • Page 93
    ... and available-for-sale-securities are classified as Level 1 as the fair value was determined from market quotes obtained from financial institutions in active markets. We use foreign currency forward contracts and an interest rate swap contract to hedge market risks relating to possible adverse...

  • Page 94
    ...: 2009 Year Ended June 30, 2008 2007 Provision for Federal income taxes before credits at statutory rate ...State income taxes ...Difference between Federal statutory rate and foreign effective rate ...Goodwill impairment without tax benefit ...Permanent differences ...Tax benefit from export sales...

  • Page 95
    ... expense for the years ended June 30, 2009, 2008 and 2007 consisted of the following: 2009 Year Ended June 30, 2008 2007 Current: Federal ...State ...Foreign ...Current income tax expense ...Deferred: Federal ...State ...Foreign ...Deferred income tax benefit ...Excess tax benefits from share-based...

  • Page 96
    ... States are fiscal years 2006 through the current year. Due to provisions allowed in the tax law, we may recognize $10.5 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, 2009...

  • Page 97
    ... outstanding (net of treasury stock), respectively. Issuance of Common Stock On June 23, 2009, we completed a public offering of 10,667,000 shares of our common stock at the offering price of $18.75 per share, less a 4.75 percent underwriting discount and received cash proceeds of $189.8 million...

  • Page 98
    ... of restricted stock units involves an agreement by our Company to deliver a specified number of shares of common stock or cash to the participant when the award vests. A participant has no ownership or voting rights associated with the underlying shares of common stock. The Board of Directors may...

  • Page 99
    ... United States. Excess tax benefits for the years ended June 30, 2009, 2008 and 2007, were $0.1 million, $5.3 million and $10.5 million, respectively. Fair Value Determination The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model, which...

  • Page 100
    ...peer group of publicly listed multinational companies. TSR will be measured as the annualized increase in the aggregate value of a company's stock price plus the value of dividends, assumed to be reinvested into shares of the company's stock at the time of dividend payment. The base price to be used...

  • Page 101
    ... plant closings in Northridge, California and Martinsville, Indiana and closed a plant in South Africa and a small facility in Massachusetts. In fiscal year 2009, we completed the transition of our corporate headquarters from Washington D.C. to Stamford, Connecticut and have initiated numerous other...

  • Page 102
    ... sales. The most significant of these programs were in Germany, Austria, the United Kingdom and various locations in the United States. In fiscal year 2009, we recorded $90.1 million for our restructuring program, primarily within SG&A, of which $74.9 million related to employee termination benefits...

  • Page 103
    ...compensation during the final years of service. In the United States, we have a SERP that provides retirement, death and termination benefits, as defined, to certain key executives designated by the Board of Directors. Our expenses related to the SERP for the years ended June 30, 2009, 2008 and 2007...

  • Page 104
    ...in accumulated other comprehensive income for the years ended June 30, 2009 and 2008 are as follows: Year Ended June 30, 2009 2008 Amounts recorded in accumulated other comprehensive income Prior service cost ...Net actuarial loss ...Income tax benefits related to above items ...Total recognized in...

  • Page 105
    ... obligations and net periodic pension and other postretirement benefit costs: 2009 Year Ended June 30, 2008 2007 Assumptions: Weighted average rates used to determine benefit obligations at June 30: Range of discount rates for pension plans ...Range of rates of compensation increase for pension...

  • Page 106
    ...Our Automotive products are marketed worldwide under brand names including JBL, Infinity, Mark Levinson, Harman/Kardon, Logic 7, Lexicon and Becker. Our premium branded audio, video, navigation and infotainment systems are offered to automobile manufacturers through engineering and supply agreements...

  • Page 107
    ...compensation, benefit and occupancy costs for corporate employees. The following table reports net sales, operating income (loss), assets, goodwill, capital expenditures and depreciation and amortization by each reporting segment: 2009 Year Ended June 30, 2008 2007 Net sales: Automotive ...Consumer...

  • Page 108
    ... on our financial position or results of operations. In re Harman International Industries, Inc. Securities Litigation On October 1, 2007, a purported class action lawsuit was filed by Cheolan Kim (the "Kim Plaintiff") against Harman and certain of our officers in the United States District Court...

  • Page 109
    ... by "knowingly failing to disclose "significant problems" relating to its portable navigation device ("PND") sales forecasts, production, pricing, and inventory" prior to January 14, 2008. The amended complaint claimed that when "Defendants revealed for the first time on January 14, 2008 that shifts...

  • Page 110
    ... 2006, Harman Becker Automotive Systems GmbH ("Harman Becker") received notice of a complaint filed against it by Siemens AG with the Regional Court in Düsseldorf in August 2006 alleging that certain of Harman Becker's infotainment products, including both radio receiver and Bluetooth hands free...

  • Page 111
    ...can be reasonably estimated. For the years ended June 30, 2009 and 2008, we incurred $9.2 million and $0.6 million, respectively, of costs relating to delayed delivery of product to an automotive customer. An inability to meet performance obligations on automotive platforms to be delivered in future...

  • Page 112
    ... price of the Notes. Note 19 - Significant Customers Presented below are the percentages of net sales to and net accounts receivables due from customers who represent ten percent or more of our net sales or net accounts receivable for the periods presented: Net Sales Year Ended June 30, 2009...

  • Page 113
    ... under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms. We note that the design of any system of controls is based in part upon certain assumptions about the likelihood of...

  • Page 114
    Part III Item 10. Directors, Executive Officers and Corporate Governance The information required by Item 10 of Part III is incorporated by reference to our Proxy Statement for the 2009 Annual Meeting of Stockholders. Item 11. Executive Compensation The information required by Item 11 of Part III is...

  • Page 115
    ... of Designation of Series A Junior Participating Preferred Stock of Harman International Industries, Incorporated, dated January 11, 2000. (filed as Exhibit 4.3 to the Annual Report on Form 10-K for the fiscal year ended June 30, 2000 and hereby incorporated by reference) Indenture, related to...

  • Page 116
    ...Exhibit 10.11 to the Annual Report on Form 10-K for the fiscal year ended June 30, 2005 and hereby incorporated by reference)** Form of Incentive Stock Option Agreement for Officers and Key Employees under the Harman International Industries, Incorporated 2002 Stock Option and Incentive Plan. (filed...

  • Page 117
    ...the Current Report on Form 8-K filed with the Commission on December 4, 2007 and hereby incorporated by reference)** Form of Performance Based Restricted Share Unit Agreement for Officers and Key Employees under the Harman International Industries, Incorporated Amended and Restated 2002 Stock Option...

  • Page 118
    ... by reference)** Form of Benefit Agreement under the Supplemental Executive Retirement Plan. (filed as Exhibit 10.14 to the Annual Report on Form 10-K for the fiscal year ended June 30, 2006 and hereby incorporated by reference)** Harman International Industries, Inc. Deferred Compensation...

  • Page 119
    ... 2002. + Form of Indemnification Letter Agreement with Directors and Executive Officers (filed as Exhibit 99.1 to the Current Report on Form 8-K filed with the Commission on February 13, 2009 and hereby incorporated by reference) Management contract, compensatory plan or arrangement. Filed herewith...

  • Page 120
    ... Paliwal Chairman and Chief Executive Officer (Principal Executive Officer) Executive Vice President and Chief Financial Officer (Principal Financial Officer) Vice President and Chief Accounting Officer (Principal Accounting Officer) Director August 19, 2009 /S/ HERBERT PARKER Herbert Parker...

  • Page 121
    ... II HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED Valuation and Qualifying Accounts and Reserves Year Ended June 30, 2009, 2008 and 2007 (in thousands) Balance at beginning of period Charged to costs and expenses Charged to other accounts Balance at end of period Classification Deductions Year...

  • Page 122
    STOCK PRICE PERFORMANCE GRAPH The following graph compares changes in cumulative total returns (assuming...LVQRWQHFFHVVDULO\LQGLFDWLYHRIIXWXUH SHUIRUPDQFHRIWKHVKDUHVRI&RPPRQ6WRFN Comparison of Cumulative Five Year Total Return $160 $140 $120 $100 $80 $60 $40 $20 $0 Jun-04 Jun-05 Jun-06...

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  • Page 124
    ... Audio Division and Country Manager, North America Klaus Blickle Chief Executive Officer - Automotive Division David Karch Vice President, Operational Excellence Sachin Lawande Vice President and Chief Technology Officer David Slump President - Consumer Audio Division and Vice President, Corporate...

  • Page 125
    ..., Harman Kardon, Infinity, JBL, Lexicon, Mark Levinson, QNX, Soundcraft and Studer are trademarks of Harman International Industries, Incorporated, registered in the United States and/or other countries. GreenEdge, HiQnet and JBL On Tour are trademarks and JBL Synthesis is a registered trademark of...