FORM 10-K - Harman

Harman International Industries, Incorporated and Subsidiaries
(Dollars in thousands, except per-share data and unless otherwise indicated)
The Notes are convertible at the option of the holders:
• during any calendar quarter commencing after December 31, 2007, if the closing price of our common
stock exceeds 130 percent of the conversion price for at least 20 trading days during any period of 30
consecutive trading days, ending on the last trading day of the preceding calendar quarter;
• during the five business day period immediately after any five-day trading period in which the trading
price per $1,000 principal amount of the Notes for each day of the trading period was less than 98
percent of the product of (1) the closing price of our common stock on such date and (2) the conversion
rate on such date;
• upon the occurrence of specified corporate transactions that are described in the Indenture; or
• at any time after June 30, 2012 until the close of business on the business day immediately prior to
October 15, 2012.
Upon conversion, a holder will receive in respect of each $1,000 of principal amount of Notes to be
converted an amount in cash equal to the lesser of (a) $1,000 or (b) the conversion value, determined in the
manner set forth in the Indenture. If the conversion value per Note exceeds $1,000, we will also deliver, at our
election, cash or common stock or a combination of cash and common stock for the conversion value in excess of
$1,000. If not converted, the Notes are due October 15, 2012.
Debt issuance costs of $4.8 million associated with this transaction were capitalized and are being amortized
to interest expense in our Consolidated Statements of Operations over the term of the Notes. The unamortized
balance of debt issuance costs at June 30, 2009 was $3.2 million.
Covenants
The Indenture contains covenants, one of which requires us to calculate the ratio of Consolidated Total Debt
to Consolidated EBITDA, as defined in the Indenture, for the most recently ended four quarter period, each time
we incur additional indebtedness. In April 2009, we have exceeded the minimum ratio for this covenant and, as a
result, we will not be able to incur additional indebtedness without obtaining a waiver from the holders of a
majority in principal amount of the Notes. We do not intend to incur additional indebtedness unless we obtain a
waiver or are able to satisfy this covenant. If we were to incur additional indebtedness, at a time when we failed
to meet the minimum ratio of Consolidated Total Debt to Consolidated EBITDA (unless we received a waiver),
we would be in violation of our covenant under the Indenture. If the violation is not remedied within 60 days, the
Notes could become due, which would have a material adverse affect on our financial condition and our results
of operations, and would also lead to an event of default under the Amended Credit Agreement and the
acceleration of the loans thereunder. We believe that we will be in compliance with these covenants for at least
the next 12 months. The covenant prohibiting the incurrence of additional debt expires on October 23, 2010.
Senior Notes
In July 2007, our 7.32% senior notes due July 2007 matured, and the remaining outstanding principal
amount of $16.5 million was retired.
Registration Rights Agreement
On October 23, 2007, we entered into a Registration Rights Agreement requiring us to register the Notes
and the shares contingently issuable upon conversion of the Notes. On October 23, 2008, we filed an
automatically effective registration statement with the SEC to meet this requirement. We are required to keep the
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