Harman Kardon 2010 Annual Report Download - page 82

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Harman International Industries, Incorporated and Subsidiaries
(Dollars in thousands, except per-share data and unless otherwise indicated)
The principal amounts, unamortized discount and net carrying amounts of the liability components and the
equity components for the Convertible Senior Notes as of June 30, 2010 and June 30, 2009 are as follows:
Principal
Balance
Unamortized
Discount
Net
Carrying
Amount
Equity
Component
June 30, 2010 ........................... $400,000 $(37,307) $362,693 $48,323
June 30, 2009 ........................... 400,000 (52,163) 347,837 48,323
At June 30, 2010, the unamortized discount is recognized as a reduction in the carrying value of the
Convertible Senior Notes in our Consolidated Balance Sheets and is being amortized over the expected term of
the Convertible Senior Notes of 60 months.
Interest expense related to the Convertible Senior Notes for the years ended June 30, 2010, 2009 and 2008
includes $5.0 million for all periods of contractual cash interest expense and an additional $ 14.8 million, $13.9
million and $9.4 million of non-cash interest expense, respectively, related to the amortization of the discount.
We reclassified approximately $0.9 million of unamortized financing costs to shareholders’ equity as these
costs were attributable to the issuance of the conversion feature associated with the Convertible Senior Notes.
Business Combinations: On July 1, 2009, we adopted the updated provisions issued by the FASB within
ASC 805, “Business Combinations.” The new guidance 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. This changed 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 treating as part of the cost of the acquisition and including
in the amount recorded for assets acquired. The new guidance applies prospectively to business combinations
which occur after July 1, 2009. The impact of these new provisions on our consolidated financial statements were
applied to our acquisition of Selenium in June 2010 and for future acquisitions will depend upon the nature,
terms and size of the acquisitions we consummate in the future. Refer to Note 2 – Acquisition for more
information on the acquisition of Selenium.
Noncontrolling Interests: On July 1, 2009, we adopted the updated provisions issued by the FASB within
ASC 810-10-65, “Consolidation,” relating to the presentation requirements for noncontrolling interests (formerly
minority interests). The new guidance requires reporting entities to present noncontrolling (minority) interests as a
component of equity (as opposed to as a liability) and provides guidance on the accounting for transactions between
an entity and noncontrolling interests. In addition, the new provisions also require companies to report a
consolidated net income (loss) measure that includes the amount attributable to such noncontrolling interests. The
adoption of the new provisions applies to noncontrolling interests prospectively from that date. However, the
presentation and disclosure requirements were applied retrospectively for all periods presented. As a result of this
adoption, we reclassified noncontrolling interests in the amount of $0.8 million from liabilities to equity in the
June 30, 2009 Consolidated Balance Sheet and we included $5.2 million, $0.8 million and $(0.4) million from our
noncontrolling interest within the net income (loss) attributable to Harman International Industries, Incorporated in
our Consolidated Statement of Operations for the years ended June 30, 2010, 2009 and 2008, respectively.
Earnings Per Share: On July 1, 2009, we adopted the updated provisions for earnings per share issued by
the FASB within ASC 260-10-45-61A. The new guidance provides that unvested share-based payment awards
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