Harman Kardon 2010 Annual Report Download - page 64

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(b) Includes amounts committed under enforceable agreements for purchase of goods and services with defined
terms as to quantity, price and timing of delivery.
(c) Refer to Note 12 – Leases in the Notes to the Consolidated Financial Statements.
(d) Refer to Note 13 – Income Taxes in the Notes to the Consolidated Financial Statements.
Equity
Total equity at June 30, 2010 was $1,134.9 million compared with $1,007.9 million at June 30, 2009. The
increase is primarily due to earnings from operations. We did not repurchase any shares of our common stock
during the fiscal year ended June 30, 2010.
Business Outlook
We continued to experience the effects of the worldwide economic crisis in our results through fiscal year
2010. However, we do believe that the markets could be recovering. Our future outlook may continue to be
impacted by the contraction in consumer discretionary spending. Our outlook could also be affected by changes
in foreign currency exchange rates potentially resulting in reduced sales and increased costs.
To mitigate the potential impacts of the weak economic markets, we continued to accelerate many of our
strategic initiatives and restructuring actions, and hence we continue to incur costs relating to STEP Change, our
current restructuring program. We are also continuing to focus our efforts on improving our global footprint,
technology portfolio, human resources and internal processes to help us improve our cost structure, which we
believe will enable us to remain competitive and mitigate the negative effects of this challenging environment.
We are continuing to proceed with our 24-month cost improvement and productivity program called STEP
Change. This program is designed to yield $400 million in sustainable savings by fiscal year 2011.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are required to include information about potential effects of changes in interest rates and currency
exchange rates in our periodic reports filed with the SEC.
Interest Rate Sensitivity/Risk
At June 30, 2010, interest on approximately 96 percent of our borrowings was determined on a fixed rate
basis. The interest rates on the balance of our debt are subject to changes in U.S. and European short-term
interest rates. To assess exposure to interest rate changes, we have performed a sensitivity analysis assuming a
hypothetical 100 basis point increase or decrease in interest rates across all outstanding debt and investments.
Our analysis indicates that the effect on fiscal year 2010 net income of such an increase and decrease in interest
rates would be approximately $5.0 million. Based on June 30, 2009 positions, the impact of such changes in
interest rates were approximately $2.4 million to fiscal year 2009 net income.
The following table provides information as of June 30, 2010 about our financial instruments that are
sensitive to changes in interest rates. The table presents principal cash flows and related average interest rates by
contractual maturity dates. Weighted average variable rates are generally based on LIBOR as of the reset dates.
The information is presented in U.S. dollar equivalents as of June 30, 2010.
Principal Payments and Interest Rates by Contractual Maturity Dates
($ in millions)
Year Ended June 30,
Thereafter Total
Fair
Value
Liabilities2011 2012 2013 2014
Debt obligation ....................... $ 0.4 $ 0.1 $ 0.1 $ 0.1 $ 0.1 $ 0.9 $ 0.9
Average interest rate ................... 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
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