Harman Kardon 2009 Annual Report Download - page 36

currencies involved in our business, foreign currency positions partially offset and are netted against one another
to reduce exposure, we cannot assure you that fluctuations in foreign currency exchange rates will not make these
products more expensive to purchase. Increases in our cost of purchasing these products could negatively impact
our financial results if we are not able to pass those increased costs on to our customers.
Our operations could be harmed by factors including political instability, natural disasters, fluctuations in
currency exchange rates and changes in regulations that govern international transactions.
The risks inherent in international trade may reduce our international sales and harm our business and the
businesses of our distributors and suppliers. These risks include:
• changes in tariff regulations;
• political instability, war, terrorism and other political risks;
• foreign currency exchange rate fluctuations;
• establishing and maintaining relationships with local distributors and dealers;
• lengthy shipping times and accounts receivable payment cycles;
• import and export licensing requirements;
• compliance with foreign laws and regulations, including unexpected changes in taxation and regulatory
requirements;
• greater difficulty in safeguarding intellectual property than in the United States; and
• difficulty in staffing and managing geographically diverse operations.
These and other risks may, among other things, increase the relative price of our products compared to those
manufactured in other countries, reducing the demand for our products.
Our business could be adversely affected by a strike or work stoppage at one of our manufacturing plants or at
a facility of one of our significant customers or at a common carrier or major shipping location.
Certain of our automotive customers are unionized and may incur work stoppages or strikes. A work
stoppage at our facilities or those of our automotive customers, or at a common carrier or major shipping
location, could have a material adverse effect on our sales, earnings and financial condition. The risk of issues of
this type at our facilities may be exacerbated by the implementation of our STEP Change program, which
involves significant staff reductions and facility relocations.
Obligations to correct product defects covered by our warranties could adversely affect our financial results.
We warrant our products to be free from defects in materials and workmanship for periods ranging from six
months to six years. Costs to correct product defects may exceed our estimates and adversely affect our results of
operations and financial condition.
If we are unable to enforce or defend our ownership and use of our intellectual property, our business may
decline.
Our future success will depend, in substantial part, on our intellectual property. We seek to protect our
intellectual property rights, but our actions may not adequately protect the rights covered by our patents, 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 to protect our proprietary information, third parties may
obtain, disclose or use our proprietary information without our authorization, which could adversely affect our
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