Harman Kardon 2009 Annual Report Download - page 80

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Harman International Industries, Incorporated and Subsidiaries
(Dollars in thousands, except per-share data and unless otherwise indicated)
Business Combinations and Noncontrolling Interests: In December 2007, the FASB issued Statement
No. 141R, Business Combinations (“SFAS 141R”), which requires the acquired entity to recognize the full fair
value of assets acquired, liabilities assumed and any noncontrolling interests in the transaction (whether a full or
partial acquisition) at the acquisition date fair value with limited exceptions. SFAS 141R will change the
accounting treatment for certain specific items and include a substantial number of new disclosure
requirements. These changes include: (a) the “acquirer” recording all assets and liabilities of the acquired
business, including goodwill, generally at their fair values, (b) recording contingent consideration arrangements
at fair value on the date of acquisition, with changes in fair value recognized in earnings until settled, and
(c) expensing acquisition-related transaction and restructuring costs rather than treated as part of the cost of the
acquisition and included in the amount recorded for assets acquired. SFAS 141R applies prospectively to
business combinations for which the acquisition date is on or after the first annual reporting period beginning on
or after December 15, 2008. SFAS 141R will apply to any acquisitions consummated by us on or after July 1,
2009. The impact of FAS No. 141(R) on our consolidated financial statements will depend upon the nature, terms
and size of the acquisitions we consummate after the effective date.
In 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—
an amendment of Accounting Research Bulletin No. 51” (“SFAS 160”). SFAS 160 requires reporting entities to
present noncontrolling (minority) interests as equity (as opposed to as a liability) and provides guidance on the
accounting for transactions between an entity and noncontrolling interests. SFAS 160 applies prospectively for us
as of July 1, 2009, except for the presentation and disclosure requirements which will be applied retrospectively
for all periods presented. We do not expect the adoption of SFAS 160 to have a material impact on our
consolidated financial statements.
Fair Value: In April 2009, the FASB issued FSP FAS 157-4, “Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That
Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance for estimating fair value in
accordance with SFAS 157, when the volume and level of activity for the asset or liability have significantly
decreased when compared with normal market activity for the asset or liability. The new approach is designed to
address whether a market is inactive, and if so whether a market should be considered distressed. The objective
of the FSP FAS 157-4 is to remain consistent with the principles of SFAS 157, yet provide additional guidance
on how fair value measurements might be determined in an inactive market. FSP 157-4 also requires additional
disclosures relating to an entity’s valuation techniques and its major categories of investments in debt and equity
securities. FSP 157-4 is effective for interim and annual reporting periods ending after June 15, 2009. Early
adoption is permitted. FSP FAS 157-4 is effective for us beginning July 1, 2009. We do not expect the adoption
of FSP FAS 157-4 to have a material impact on our consolidated financial statements.
In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of
Financial Instruments” (“FSP FAS 107-1 & APB 28-1”). FSP FAS 107-1 & APB 28-1 amends SFAS 107,
“Disclosures about Fair Value of 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
statements. FSP FAS 107-1 & APB 28-1 also amends APB No. 28, “Interim Financial Reporting”, by requiring
these disclosures in summarized financial information at interim reporting periods. This FSP is effective for
interim reporting periods ending after June 15, 2009. Early adoption is permitted. FSP FAS 107-1 & APB 28-1 is
effective for us beginning July 1, 2009. We do not expect the adoption of FSP FAS 107-1 & APB 28-1 to have a
material impact on our consolidated financial statements.
Convertible Debt: In May 2008, the FASB issued FSP APB 14-1, “Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” (“FSP APB
14-1”). FSP APB 14-1 requires the issuer of convertible debt instruments with cash settlement features to
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