Harman Kardon 2011 Annual Report Download - page 39

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The complaint alleged that the defendants omitted to disclose material adverse facts about Harman’s
financial condition and business prospects. The complaint contended that had these facts not been concealed at
the time the merger agreement with Kohlberg Kravis Roberts & Co. (“KKR”)and Goldman Sachs Capital
Partners was entered into, there would not have been a merger agreement, or it would have been at a much lower
price, and the price of our common stock therefore would not have been artificially inflated during the Class
Period. The Kim Plaintiff alleged that, following the reports that the proposed merger was not going to be
completed, the price of our common stock declined, causing the plaintiff class significant losses.
On November 30, 2007, the Boca Raton General Employees’ Pension Plan (the “Boca Raton Plaintiff”)
filed a purported class action lawsuit against Harman and certain of our officers in the Court seeking
compensatory damages and costs on behalf of all persons who purchased our common stock between April 26,
2007 and September 24, 2007. The allegations in the Boca Raton complaint are essentially identical to the
allegations in the original Kim complaint, and like the original Kim complaint, the Boca Raton complaint alleges
claims for violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder.
On January 16, 2008, the Kim Plaintiff filed an amended complaint. The amended complaint, which
extended the Class Period through January 11, 2008, contended that, in addition to the violations alleged in the
original complaint, Harman also violated Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5
promulgated thereunder by “knowingly failing to disclose “significant problems” relating to its Personal
Navigation Device (“PND”) sales forecasts, production, pricing, and inventory” prior to January 14, 2008. The
amended complaint claimed that when “Defendants revealed for the first time on January 14, 2008 that shifts in
PND sales would adversely impact earnings per share by more than $1.00 per share in fiscal 2008,” that led to a
further decline in our share value and additional losses to the plaintiff class.
On February 15, 2008, the Court ordered the consolidation of the Kim action with the Boca Raton action,
the administrative closing of the Boca Raton action, and designated the short caption of the consolidated action
as In re Harman International Industries, Inc. Securities Litigation, civil action no. 1:07-cv-01757 (RWR). That
same day, the Court appointed Arkansas Public Retirement System as lead plaintiff (“Lead Plaintiff”) and
approved the law firm Cohen, Milstein, Hausfeld and Toll, P.L.L.C. to serve as lead counsel.
On March 24, 2008, the Court ordered, for pretrial management purposes only, the consolidation of Patrick
Russell v. Harman International Industries, Incorporated, et al. with In re Harman International Industries, Inc.
Securities Litigation.
On May 2, 2008, Lead Plaintiff filed a consolidated class action complaint (the “Consolidated
Complaint”). The Consolidated Complaint, which extends the Class Period through February 5, 2008, contends
that Harman and certain of our officers and directors violated Sections 10(b) and 20(a) of the Exchange Act and
Rule 10b-5 promulgated thereunder, by issuing false and misleading disclosures regarding our financial condition
in fiscal year 2007 and fiscal year 2008. In particular, the Consolidated Complaint alleges that defendants
knowingly or recklessly failed to disclose material adverse facts about MyGIG radios, PNDs and our capital
expenditures. The Consolidated Complaint alleges that when Harman’s true financial condition became known to
the market, the price of our common stock declined significantly, causing losses to the plaintiff class.
On July 3, 2008, defendants moved to dismiss the Consolidated Complaint in its entirety. Lead Plaintiff
opposed the defendants’ motion to dismiss on September 2, 2008, and defendants filed a reply in further support
of their motion to dismiss on October 2, 2008. The motion is now fully briefed. As of June 30, 2011, the case
remained open with no new developments.
Patrick Russell v. Harman International Industries, Incorporated, et al.
Patrick Russell (the “Russell Plaintiff”) filed a complaint on December 7, 2007 in the United States District
Court for the District of Columbia and an amended purported putative class action complaint on June 2, 2008
against Harman and certain of our officers and directors alleging violations of the Employee Retirement Income
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