Harman Kardon 2011 Annual Report Download - page 37

likelihood that further proceedings will be instituted against us. In the event that there is an adverse ruling in any
legal proceeding, we may be required to make payments to third parties that could harm our business or cash
flows or financial results. Furthermore, regardless of the merits of any claim, the continued maintenance of these
legal proceedings may result in substantial legal expense and could also result in the diversion of our
management’s time and attention away from our business.
We have deferred tax assets in our consolidated financial statements.
Our consolidated financial statements include net deferred tax assets of $281.9 million as of June 30, 2011,
which relate to temporary differences (differences between the assets and liabilities in the consolidated financial
statements and the assets and liabilities in the calculation of taxable income). The valuation of deferred tax assets
is based on various projections for future taxable income reversing taxable temporary differences and tax
planning strategies. Thus, when actual taxable income differs from projections, it may become necessary to
adjust the valuation of our deferred tax assets, which would impact our results of operations and financial
condition.
Harman International Industries, Incorporated is a holding company with virtually no operations of its own
and therefore our cash flow and ability to service debt is dependent upon distributions from our subsidiaries.
Our ability to service our debt and pay dividends is dependent upon the operating earnings of our
subsidiaries. The distribution of those earnings, or advances or other distributions of funds by those subsidiaries
to Harman International Industries, Incorporated, all of which could be subject to statutory or contractual
restrictions, are contingent upon the subsidiaries’ earnings and are subject to various business considerations.
Our success depends upon our ability to attract and retain key employees and the succession of senior
management.
Our success largely depends on the performance of our management team and other key employees. If we
are unable to attract and retain talented, highly qualified senior management and other key people, our future
operations could be adversely affected. In addition, if we are unable to effectively provide for the succession of
senior management, including our chief executive officer, our business may be materially adversely affected.
While we follow a disciplined, ongoing succession planning process and have succession plans in place for
senior management and other key executives, these do not guarantee that the services of qualified senior
executives will continue to be available to us at particular moments in time.
Any acquisitions we make could disrupt our business and materially harm our financial condition, results of
operations and cash flows.
We may, from time to time, consider acquisitions of complementary companies, products or technologies.
Acquisitions involve numerous risks, including difficulties in the integration of the acquired businesses, the
diversion of our management’s attention from other business concerns, the assumption of unknown liabilities,
undisclosed risks impacting the target and potential adverse effects on existing business relationships with our
current customers and suppliers. In addition, any acquisitions could involve the incurrence of substantial
additional indebtedness or dilution to our stockholders. We cannot assure you that we will be able to successfully
integrate any acquisitions that we undertake or that such acquisitions will perform as planned or prove to be
beneficial to our operations and cash flows. Any such failure could seriously harm our financial condition, results
of operations and cash flows.
Item 1B. Unresolved Staff Comments
None.
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