Harman Kardon 2010 Annual Report Download - page 55

fiscal year 2010 compared to the prior fiscal year, primarily due to lower restructuring expenses and R&D,
partially offset by higher variable compensation expenses associated with improved performance. Foreign
currency translation unfavorably impacted SG&A by $0.1 million.
Professional SG&A decreased $17.1 million to $138.8 million in fiscal year 2009 compared to the prior
fiscal year. As a percentage of net sales, SG&A increased 3.3 percentage points to 28.2 percent in fiscal year
2009 compared to the prior fiscal year, primarily due to a decrease in net sales. Foreign currency favorably
impacted SG&A by $4.8 million. R&D decreased $7.1 million to $36.8 million or 7.5 percent of net sales,
compared to $43.9 million or 7.0 percent of net sales in the prior fiscal year. Other factors contributing to the
decrease in SG&A were lower selling expenses due to tighter cost controls. These decreases were partially offset
by an increase in restructuring expenses of $8.0 million.
Other—Other SG&A includes compensation, benefit and occupancy costs for our corporate employees.
Other SG&A increased $17.1 million to $69.0 million in fiscal year 2010 primarily due to higher compensation
and benefit expenses due to improved performance, higher R&D and transaction costs related to the acquisition
of Selenium. In the prior year compensation expense was lower due to a benefit from stock option forfeitures due
to executive retirements and lower benefit expenses due to the suspension of 401(k) match and profit sharing
contributions.
Other SG&A decreased $10.4 million to $52.0 million in fiscal year 2009 primarily due to lower share-
based compensation and benefit expenses, primarily reflecting a benefit from stock option forfeitures due to
executive retirements and lower benefit expenses due to the suspension of 401(k) match and profit sharing
contributions and $13.8 million of merger costs incurred in fiscal year 2008.
Restructuring
We announced a restructuring program in June 2006 designed to increase efficiency in our manufacturing,
engineering and administrative organizations. The implementation of this program has continued through fiscal
year 2010, as we expanded our restructuring actions to improve global footprint, cost structure, technology
portfolio, human resources and internal processes.
In fiscal year 2010, we announced the relocation of certain manufacturing activities from the United
Kingdom to Hungary, a consolidation and optimization of our manufacturing capabilities in China and a
reorganization of our PND business in Germany, which resulted in our exit of the PND distribution channel. In
fiscal year 2009, programs initiated included the closure of the Woodbury, New York facility and numerous
headcount reductions across our business units to reduce excess capacity due to decreased sales. The most
significant of these programs were in Germany, Austria, the United Kingdom, Sweden and various locations in
the United States. We additionally completed the transition of our corporate headquarters from Washington, D.C.
to Stamford, CT. In fiscal year 2008, we announced plant closings in Northridge, California and Martinsville,
Indiana and closed a plant in South Africa and a small facility in Massachusetts.
In the fiscal year ended June 30, 2010, we recognized $13.0 million for our restructuring program, primarily
within SG&A in our Consolidated Statement of Operations, of which $10.3 million related to employee
termination benefits. Cash paid for these initiatives was $45.5 million. In addition, we recognized $4.9 million of
accelerated depreciation and inventory provisions in our Consolidated Statement of Operations, primarily within
cost of sales.
In the fiscal year ended June 30, 2009, we recognized $89.4 million for our restructuring program, primarily
within SG&A in our Consolidated Statement of Operations, of which $74.5 million related to employee
termination benefits. Cash paid for these initiatives was $46.2 million. In addition, we recognized $10.3 million
of accelerated depreciation primarily within cost of sales in our Consolidated Statement of Operations.
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