FORM 10-K - Harman

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Harman International Industries, Incorporated and Subsidiaries (Dollars in thousands, except per-share data and unless otherwise indicated) June 30, 2009, 2008 and 2007, respectively. The total income tax benefit recognized in the Consolidated Income Statement for share-based compensation arrangements was $1.2 million, $5.6 million and $4.5 million for the years ended June 30, 2009, 2008 and 2007, respectively. 2002 Plan The 2002 Plan permits the grant of stock options, stock appreciation rights, restricted stock and restricted stock units for up to 6,760,000 shares of our common stock. Shares may be issued as original issuances, treasury shares or a combination of both. We believe that such awards better align the interests of our employees with those of our stockholders. Option awards are granted with an exercise price equal to the market price of our stock on the date of the grant. The option awards generally vest over three to five years of continuous service commencing one year from the date of the grant and expire after ten years. At June 30, 2009, a total of 3,231,699 shares of common stock were available for grant under the 2002 Plan. Restricted Stock Awards A grant of restricted stock involves the immediate transfer of ownership of a specified number of shares of common stock with a “substantial risk of forfeiture” for a period of at least three years. A participant who receives a restricted stock grant is entitled immediately to voting, dividend and other share ownership rights associated with the underlying shares of common stock. At June 30, 2009, a total of 86,992 shares of restricted stock were outstanding, of which 51,000 shares were granted under the 2002 Plan and 35,992 shares were granted outside of the 2002 Plan. Restricted Stock Units A grant of restricted stock units involves an agreement by our Company to deliver a specified number of shares of common stock or cash to the participant when the award vests. A participant has no ownership or voting rights associated with the underlying shares of common stock. The Board of Directors may, at its discretion, authorize the payment of dividend equivalents on the restricted stock units. During the third quarter of 2009, the Board of Directors suspended the dividend on our common stock. At June 30, 2009, a total of 539,440 restricted stock units were outstanding, of which 507,364 share units were granted under the 2002 Plan and 32,076 share units were granted outside of the 2002 Plan. Stock Appreciation Rights Stock appreciation rights allow the holders to receive a predetermined percentage of the spread, not to exceed 100 percent, between the option price and the fair market value of the shares on the date of exercise. A performance unit is the equivalent of $100 and is awarded for the achievement of specified management objectives as a condition to the payment of the award. The performance period will not be less than three years. No stock appreciation right or performance unit grants have been made under the 2002 Plan. 1992 Incentive Plan We also have options outstanding under our 1992 Incentive Plan. Shares under the 1992 Incentive Plan can be issued as original issuances or treasury shares or a combination of both. Options to purchase 224,824 shares with expiration dates ranging from November 10, 2008 to November 8, 2012 are outstanding under our 1992 Incentive Plan. The 1992 Incentive Plan was approved by our stockholders and had no shares available for grant on June 30, 2009. 77
Excess Tax Benefits Harman International Industries, Incorporated and Subsidiaries (Dollars in thousands, except per-share data and unless otherwise indicated) We include the cash flows related to tax benefits resulting from tax deductions in excess of the compensation cost recognized (excess tax benefits) as financing cash flows in our Consolidated Statements of Cash Flows, in accordance with accounting principles generally accepted in the United States. Excess tax benefits for the years ended June 30, 2009, 2008 and 2007, were $0.1 million, $5.3 million and $10.5 million, respectively. Fair Value Determination The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model, which uses the assumptions noted in the following table. 2009 Year Ended June 30, 2008 2007 Expected volatility .................................... 42.0 – 72.6% 35.1% – 52.0% 34.2% – 42.0% Weighted-average volatility ............................. 50.2% 40.7% 36.2% Expected annual dividend ............................... — $0.05 $0.05 Expected term (in years) ................................ 1.89 – 6.51 1.69 – 6.71 1.42 – 7.69 Risk-free rate ......................................... 0.81% – 3.64% 1.80% – 5.01% 4.43% – 4.97% Groups of option holders (directors, executives and non-executives) that have similar historical behavior are considered separately for valuation purposes. Expected volatilities are based on historical closing prices of our common stock over the expected option term. We use historical data to estimate option exercises and employee terminations within the valuation model. The expected term of options granted is derived using the option valuation model and represents the estimated period of time from the date of grant that the option is expected to remain outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Stock Option Activity A summary of option activity under our stock option plans for the year ended June 30, 2009 and changes during the year are presented below: Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding at July 1, 2008 ............................. 2,636,627 $62.22 6.40 $7,018 Granted ......................................... 809,735 30.69 Exercised ....................................... (50,720) 11.23 Forfeited or expired ............................... (766,260) 74.87 Outstanding at June 30, 2009 ............................ 2,629,382 61.02 7.51 $ 679 Exercisable at June 30, 2009 ............................ 853,340 $69.14 5.51 $ 490 The weighted-average grant-date fair value of options granted during the years ended June 30, 2009, 2008 and 2007 was $11.18, $21.44 and $31.61, respectively. The total intrinsic value of options exercised during the years ended June 30, 2009, 2008 and 2007 was $0.4 million, $27.8 million and $42.9 million, respectively. 78
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Touching lives with premium audio a
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Financial Highlights FIVE-YEAR SUMM
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To Our Shareholders FROM THE CHAIRM
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Harman’s Professional Division la
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(opposite) Harman’s partnership w
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(above left) Harman’s new GreenEd
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Forward-Looking Statements This rep
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electronic devices. Our branded aud
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ole in developing the emerging Ethe
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We also produce professional amplif
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For the fiscal year ended June 30,
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We believe that our facilities are
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suffer. In addition, our competitor
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Covenants in our existing debt agre
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usiness. From time to time, third p
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On November 30, 2007, the Boca Rato
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Item 4. Submission of Matters to a
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Part II Item 5. Market for Registra
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Item 7. Management’s Discussion a
Page 47 and 48: assets and liabilities. Actual resu
Page 49 and 50: tax assets to an amount we believe
Page 51 and 52: Consumer net sales increased 7 perc
Page 53 and 54: HiQnet products as we achieved econ
Page 55 and 56: Other SG&A expenses increased $16.9
Page 57 and 58: our cash and cash equivalents and s
Page 59 and 60: Borrowings Under Revolving Credit F
Page 61 and 62: The Notes are convertible at the op
Page 63 and 64: Interest Rate Sensitivity/Risk At J
Page 65 and 66: Item 8. Consolidated Financial Stat
Page 67 and 68: Report of Independent Registered Pu
Page 69 and 70: CONSOLIDATED STATEMENTS OF OPERATIO
Page 71 and 72: HARMAN INTERNATIONAL INDUSTRIES, IN
Page 73 and 74: Harman International Industries, In
Page 83 and 84: Note 5 - Goodwill Harman Internatio
Page 97: Harman International Industries, In
Page 113 and 114: Item 9. Changes in and Disagreement
Page 115 and 116: Part IV Item 15. Exhibits and Finan
Page 117 and 118: Exhibit No. Exhibit Description 10.
Page 119 and 120: Exhibit No. Exhibit Description 10.
Page 121 and 122: Schedule II Classification HARMAN I
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Page 125: 400 Atlantic Street, Suite 1500 Sta
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FORM 10-K - Harman

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