FORM 10-K - Harman

Harman International Industries, Incorporated and Subsidiaries
(Dollars in thousands, except per-share data and unless otherwise indicated)
Note 2 – Inventories, net
Inventories, net are stated at the lower of cost or market. Cost is determined principally by the first-in,
first-out method. The valuation of inventory requires us to make judgments and estimates regarding obsolete,
damaged or excess inventory, as well as current and future demand for our products. Estimation of inventory
valuation reserves requires us to analyze the aging and future demand for inventories and to forecast future
product pricing trends, which has an effect on our results of operations. We calculate inventory reserves using a
combination of lower of cost or market analysis, analysis of historical usage data, forecast demand data and
historical disposal rates. Specific product valuation analysis is applied, if practicable, to those items of inventory
representing a higher portion of the value of inventory on-hand. At June 30, 2009 and 2008 our inventory
reserves were $91.5 million and $91.8 million, respectively.
At June 30, 2009 and 2008, inventories consisted of the following:
June 30,
2009 2008
Finished goods .................................................. $147,002 $150,634
Work in process ................................................. 51,215 60,045
Raw materials .................................................. 135,487 179,959
Inventories, net ................................................. $333,704 $390,638
Note 3 – Property, Plant & Equipment, net
At June 30, 2009 and 2008, property, plant and equipment consisted of the following:
Estimated
Useful Lives
June 30,
(in Years) 2009 2008
Land ...................................................... $ 13,506 $ 14,659
Buildings and improvements ................................... 1-50 291,831 311,336
Machinery and equipment ..................................... 3-20 948,123 1,082,359
Furniture and fixtures ......................................... 3-10 40,069 46,749
Property, plant and equipment, gross ............................. 1,293,529 1,455,103
Less accumulated depreciation and amortization .................... (774,933) (815,061)
Property, plant and equipment, net ............................... $ 518,596 $ 640,042
Note 4 – Accrued Warranties
At June 30, 2009 and 2008, details of our accrued warranties consisted of the following:
June 30,
2009 2008
Accrued warranties, beginning of year ............................... $126,977 $ 48,148
Warranty expense ............................................... 54,103 125,360
Warranty payments (cash or in-kind) ................................ (52,785) (52,848)
Other (1) ........................................................ (11,622) 6,317
Accrued warranties, end of year .................................... $116,673 $126,977
(1) Other primarily represents foreign currency translation.
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