Harman Kardon 2011 Annual Report Download - page 79

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Note 3 – Discontinued Operations
On April 9, 2010, we and our wholly-owned subsidiary, Harman Holding GmbH & Co. KG (“Harman KG”)
entered into a share purchase agreement (the “Purchase Agreement”) to sell all of the issued and outstanding
shares of QNX Software Systems Co., QNX Software Systems (Wavemakers), Inc. and QNX Software Systems,
Inc. (collectively, the “QNX” Entities) for $200 million. The sale closed on June 1, 2010. In connection with this
transaction, we recognized a gain of $152.7 million ($114.2 million, net of income taxes) in our Consolidated
Statement of Operations for the fiscal year ended June 30, 2010 which is included in income (loss) from
discontinued operations, net of income taxes. The sale price was subject to a working capital adjustment of $0.1
million, which is also included in the gain. The results of operations for the QNX Entities have been reclassified to
discontinued operations in all periods presented. The tax expense within discontinued operations for fiscal year
2010 includes an expense of $35.4 million relating to tax on previously permanently reinvested earnings. We
intend to repatriate a portion of these earnings, as a result of the sale of the QNX Entities and therefore have
recorded a deferred income tax liability associated with the eventual repatriation to the U.S. in a subsequent
period.
The operations of the QNX Entities have been segregated from continuing operations and are reflected as
discontinued operations in the Consolidated Statements of Operations as follows:
Year Ended June 30,
2010 2009
Net sales ....................................................... $ 35,309 $36,126
Gain on sale of discontinued operations, net of income taxes .............. 114,197 —
Income (loss) from discontinued operations, net of income taxes ........... 9,394 (9,159)
Net income (loss) from discontinued operations ........................ 123,591 (9,159)
Diluted earnings (loss) per share from discontinued operations ............. 1.75 (0.16)
In fiscal year 2009, a $12.8 million goodwill impairment charge was recorded related to the QNX Entities.
Note 4 – Inventories, net
At June 30, 2011 and 2010, inventories from continuing operations consisted of the following:
June 30,
2011 2010
Finished goods .................................................. $153,469 $130,827
Work in process ................................................. 67,534 59,196
Raw materials .................................................. 202,134 163,100
Inventories, net ................................................. $423,137 $353,123
At June 30, 2011 and 2010 our inventory reserves were $73.3 million and $75.1 million, respectively.
Note 5 – Property, Plant & Equipment, net
At June 30, 2011 and 2010, property, plant and equipment from continuing operations consisted of the
following:
Estimated
Useful Lives
(in Years)
June 30,
2011 2010
Land ...................................................... $ 11,974 $ 10,370
Buildings and improvements ................................... 1-50 280,053 255,440
Machinery and equipment ..................................... 3-20 1,050,892 880,364
Furniture and fixtures ........................................ 3-10 30,769 28,137
Property, plant and equipment, gross ............................ 1,373,688 1,174,311
Less accumulated depreciation and amortization ................... (903,388) (752,362)
Property, plant and equipment, net .............................. $ 470,300 $ 421,949
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