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<strong>Harman</strong> International Industries, Incorporated and Subsidiaries<br />
(Dollars in thousands, except per-share data and unless otherwise indicated)<br />
purchase price consideration associated with a prior acquisition. After conducting a step two test on this unit<br />
following the same methodology as described above, we determined that this goodwill was similarly impaired<br />
and, as a result, $2.3 million and $2.9 million of non-cash goodwill impairment charges were recognized in our<br />
Consolidated Statements of Operations in the quarters ended March 31, 2009 and June 30, 2009, respectively.<br />
There were no tax impacts in connection with these charges nor did these non-cash charges affect our debt<br />
covenant compliance, cash flows or ongoing results of operations.<br />
The annual impairment test conducted on April 30, 2008 indicated that the fair value of each reporting unit<br />
was in excess of its carrying value and, as such, no impairment was deemed to exist.<br />
The changes in the carrying amount of goodwill for the year ended June 30, 2009 were as follows:<br />
Automotive Consumer Professional Other Total<br />
Balance at June 30, 2008 .......................... $367,492 $ 23,369 $45,586 $ — $ 436,447<br />
Realignment of business segments (Note 15) ..........<br />
Contingent purchase price consideration associated with<br />
(52,497) — — 52,497 —<br />
the acquisition of Innovative Systems GmbH ........ 11,290 — — — 11,290<br />
Impairment charge .............................. (295,080) (22,663) — (12,820) (330,563)<br />
Other adjustments (1) .............................. (31,205) (706) (3,386) — (35,297)<br />
Balance at June 30, 2009 .......................... $ — $ — $42,200 $ 39,677 $ 81,877<br />
(1) The other adjustments to goodwill primarily consist of foreign currency translation adjustments.<br />
The contingent purchase price consideration associated with the acquisition of Innovative Systems GmbH<br />
continues through August 2025, unless the buyout option is exercised by either the buyer or the seller in<br />
September 20<strong>10</strong>. There is also approximately $<strong>10</strong> million of contingent purchase price consideration associated<br />
with the acquisition of QNX which is payable in November 2009 when the contingency lapses.<br />
Note 6 – Debt<br />
Short Term Borrowings<br />
At June 30, 2009 and 2008, we had no outstanding short-term borrowings. For the fiscal year ended June 30,<br />
2009, we maintained lines of credit totaling $14.0 million in the aggregate in Germany, Austria and Hungary. For<br />
the fiscal year ended June 30, 2008, we maintained lines of credit totaling $16.7 million in the aggregate in<br />
Japan, China and the United Kingdom.<br />
We classify our debt based on the contractual maturity dates of the underlying debt instruments. We defer<br />
costs associated with debt issuance over the applicable term of the debt. These costs are amortized to interest<br />
expense in our Consolidated Statements of Operations.<br />
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