Harman Kardon 2011 Annual Report Download - page 53

Loss on Deconsolidation of Variable Interest Entity
In December 2009, we determined that we were no longer the primary beneficiary of a joint venture which
was considered a variable interest entity and previously required consolidation. Since we were no longer the
primary beneficiary, in December 2009 we deconsolidated the Harman Navis, Inc. joint venture which resulted in
an overall loss of $13.1 million in our Automotive segment and is included in our Consolidated Statement of
Operations as loss on deconsolidation of variable interest entity for the fiscal year ended June 30, 2010. The loss
resulted primarily from the difference between the fair value of the consideration received for the disposal of our
equity interest and the net asset value of the joint venture that was deconsolidated.
Restructuring
We announced a restructuring program in June 2006 designed to increase efficiency in our manufacturing,
engineering and administrative organizations and expanded these activities from that time through June 2011 to
improve our global footprint, cost structure, technology portfolio, human resources and internal processes.
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 was 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, Connecticut. 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 the exit of the PND distribution channel in Germany. In fiscal year 2011, we announced
the relocation of certain manufacturing activities from Washington, Missouri to Mexico, the outsourcing of
certain manufacturing activities to third party suppliers, and we continued to refine and expand on activities
launched in prior years.
A summary and components of our restructuring initiatives are as follows and include accruals for new
programs as noted above plus revisions to estimates, both increases and decreases, to programs accrued in prior
periods:
Severance
Related
Costs
Third Party
Contractor
Termination
Costs
Facility Closure
and Other
Related Costs
Asset
Impairments(1) Total
Liability, July 1, 2008 ................... $33,639 $ 52 $ 1,640 $ 0 $ 35,331
Expense(2) ............................. 75,157 326 13,887 10,305 99,675
Accumulated depreciation offset ........... 0 0 0 (10,305) (10,305)
Payments ............................. (39,106) (65) (6,894) 0 (46,065)
Foreign currency translation .............. (1,760) (5) 0 0 (1,765)
Liability, June 30, 2009 .................. 67,930 308 8,633 0 76,871
Expense(2) ............................. 10,049 410 2,535 4,880 17,874
Accumulated depreciation offset ........... 0 0 0 (4,880) (4,880)
Payments ............................. (41,186) (33) (4,299) 0 (45,518)
Foreign currency translation .............. (3,757) 3 5 0 (3,749)
Liability, June 30, 2010 .................. 33,036 688 6,874 0 40,598
Expense(2) ............................. 10,541 1,024 3,518 5,564 20,647
Accumulated depreciation offset ........... 0 0 0 (5,564) (5,564)
Payments ............................. (15,231) (513) (3,833) 0 (19,577)
Foreign currency translation .............. 3,416 103 (1) 0 3,518
Liability, June 30, 2011 .................. $31,762 $1,302 $ 6,558 $ 0 $ 39,622
(1) Credits related to restructuring charges for accelerated depreciation and inventory provisions are recorded
against the related assets in Property, plant & equipment, net or Inventory in our Consolidated Balance
Sheets and do not impact the restructuring liability.
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