FORM 10-K - Harman

Harman International Industries, Incorporated and Subsidiaries
(Dollars in thousands, except per-share data and unless otherwise indicated)
Derivatives in Cash Flow Hedging Relationships:
The following tables show derivative activity for derivatives designated as cash flow hedges for the year
ended June 30, 2009:
Derivatives Designated as Hedging Instruments For the Year Ended June 30, 2009:
Location of
Derivative
Location of
Gain/(Loss) Gain/(Loss) Gain/(Loss)
Gain/(Loss) Reclassified Reclassified Recognized Loss Recognized Location of Gain/(Loss)
Recognized from AOCI from AOCI in Income on in Income on Amount from Amounts
in OCI into Income into Income Derivative Derivatives Excluded from Excluded from
(Effective (Effective (Effective (Ineffective (Ineffective Effectiveness Effectiveness
Derivative
Portion) Portion) Portion) Portion) Portion) Testing Testing
Foreign exchange
Other
contract—forwards . . .
Foreign exchange
$(5,355) Cost of sales $4,890 $— expense, net $(1,160)
contract—forwards . . . — SG&A 347 — SG&A (71)
Interest rate swap ...... (2,666) Rent expense (51) Rent expense (6) —
Total cash flow
hedges ............. $(8,021) $5,186 $ (6) $(1,231)
Note: No amount of ineffectiveness was recognized in the Consolidated Statements of Operations for these
designated cash flow hedges and all components of each derivatives gain or loss was included in the assessment
of hedge effectiveness with the exception of forward points.
Economic Hedges
The following summarizes gains and losses from our derivative instruments that are not designated as
hedging instruments for the year ended June 30, 2009:
Derivative Location of Derivative Gain/(Loss)
Year Ended
June 30, 2009
Foreign exchange contracts—forwards ........ Cost of sales $287
Note 8 – Fair Value Measurements
In the first quarter of fiscal year 2009, we adopted SFAS 157. The adoption of SFAS 157 did not have a
material impact on our consolidated financial statements.
SFAS 157 establishes a three-tier fair value hierarchy to prioritize the inputs used in measuring fair
value. The hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority
to unobservable inputs (Level 3). The three levels are defined as follows:
Level 1: Observable inputs, such as unadjusted quoted market prices in active markets for the
identical asset or liability.
Level 2: Inputs that are observable for the asset or liability, either directly or indirectly through
market corroboration, for substantially the full term of the financial instrument.
Level 3: Unobservable inputs reflecting the entity’s own assumptions in measuring the asset or
liability at fair value.
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