HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
RETIREMENT SAVINGS PLAN
Financial Statements and Supplemental Schedule
June 26, 2001 and 2000
(With Independent Auditors' Report Thereon)
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
RETIREMENT SAVINGS PLAN
Index to Financial Statements and Supplemental Schedule
Page
Independent Auditors' Report 1
Statements of Net Assets Available for Plan
Benefits - June 26, 2001 and 2000 2
Statements of Changes in Net Assets
Available for Plan Benefits - Years ended
June 26, 2001 and 2000 3
Notes to Financial Statements 4
Schedule
Schedule of Assets (Held at End of Year) -
June 26, 2001 9
All other supplemental schedules omitted are not applicable
or are not required based on disclosure requirements of the
Employee Retirement Income Security Act of 1974 and
regulations issued by the Department of Labor.
Independent Auditors' Report
The Administrative Committee of the Board of Directors
Harman International Industries, Incorporated:
We have audited the accompanying statements of net assets
available for Plan benefits of Harman International Industries,
Incorporated Retirement Savings Plan as of June 26, 2001 and
2000 and the related statements of changes in net assets
available for Plan benefits for the years then ended.
These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for
Plan benefits as of June 26, 2001 and 2000 and the changes in net
assets available for Plan benefits for the years then ended in
conformity with accounting principles generally accepted in the
United States of America.
Our audits were performed for the purpose of forming an opinion
on the basic financial statements taken as a whole. The
supplemental schedule of assets (held at end of year) is presented
for the purpose of additional analysis and is not a required part
of the basic financial statements but is supplementary information
required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule
has been subjected to the auditing procedures applied in the audits
of the basic financial statements and in our opinion, is fairly
stated, in all material respects, in relation to the basic financial
statements taken as a whole.
October 30, 2001
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
RETIREMENT SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
June 26, 2001 and 2000
2001 2000
------------ ------------
Assets:
Investments, at fair value (note 3):
Money Market $ 346,698 293,074
Mutual Funds 69,685,909 87,903,438
Common Stock 15,495,312 11,774,008
Participant Loans Fund --- 144
Investments, at contract value - investment
contract (note 3) 27,814,361 26,111,932
------------ ------------
Total investments 113,342,280 126,082,596
------------ ------------
Contributions receivable:
Participant 47,523 89,590
Employer 6,377,661 4,256,303
------------ ------------
Total contributions receivable 6,425,184 4,345,893
------------ ------------
Total plan assets 119,767,464 130,428,489
Accrued expenses --- 22,000
------------ ------------
Net assets available for plan benefit $119,767,464 130,406,489
============ ============
See accompanying notes to financial statements.
2
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
RETIREMENT SAVINGS PLAN
Statements of Changes in Net Assets Available for Plan Benefits
Years ended June 26, 2001 and 2000
2001 2000
------------ ------------
Additions to net assets attributed to:
Investment income (loss):
Net appreciation (depreciation) in fair
value of investments $(25,608,419) 11,853,428
Interest and dividends 8,448,421 8,714,491
------------ ------------
Total investment income (loss) (17,159,998) 20,567,919
------------ ------------
Contributions:
Employer 8,755,347 7,057,730
Participant 8,128,919 1,471,759
Rollovers 3,107,807 195,459
------------ ------------
Total contributions 19,992,073 13,724,948
------------ ------------
Total additions 2,832,075 34,292,867
------------ ------------
Deductions from net assets attributed to:
Benefit payments 13,455,693 10,908,085
Refund of excess contributions 6,587 ---
Administrative expenses 8,820 12,730
------------ ------------
Total deductions 13,471,100 10,920,815
------------ ------------
Net increase (decrease) (10,639,025) 23,372,052
Net assets available for Plan benefits:
Beginning of year 130,406,489 107,034,437
------------ ------------
End of year $119,767,464 130,406,489
============ ============
See accompanying notes to financial statements.
3
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
RETIREMENT SAVINGS PLAN
Notes to Financial Statements
June 26, 2001 and 2000
(1) Summary of Significant Accounting Policies
(a) Basis of Presentation
The accompanying financial statements of the Harman
International Industries, Incorporated Retirement
Savings Plan (the Plan) have been presented on an
accrual basis and present the net assets available
for Plan benefits and changes in those net assets.
(b) Investments
The Plan's investments are stated at fair value except
for its fully benefit responsive investment contract,
which is valued at contract value (note 4). Shares
of registered investment companies and mutual funds
are valued at quoted market prices which represent the
net asset value of shares held by the Plan at year-end.
The Company stock is valued at its quoted market price.
Participant loans are valued at cost, which approximates
fair value.
Purchases and sales of securities are recorded on a
trade-date basis. Interest income is recorded on the
accrual basis. Dividends are recorded on the ex-dividend
date.
(c) Use of Estimates
Management of the Company has made a number of estimates
and assumptions relating to the reporting of net assets
and the changes in net assets and the disclosure of contingent
assets and liabilities to prepare these financial statements
in conformity with accounting principles generally accepted
in the United States of America. Actual results could differ
from these estimates.
(d) Payment of Benefits
Benefits are recorded when paid.
(e) Administrative Expenses
Administrative expenses are paid by the Plan unless paid by
Harman International Industries, Incorporated, the Sponsor.
(2) Plan Description
The Plan agreement dated July 27, 2000 amends and restates
the Harman International Industries, Incorporated Retirement
Savings Plan. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA).
4
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
RETIREMENT SAVINGS PLAN
Notes to Financial Statements
June 26, 2001 and 2000
The Plan is a defined contribution savings and profit sharing
plan sponsored by the Company. The Plan covers all eligible
employees, as defined by the Plan, provided they have completed
six months of consecutive service and have worked 500 hours.
Effective June 27, 2000, the basic contribution percentage was
increased from 2% to 3% of a total participant's compensation,
the maximum deferral percentage was increased from 12% to 15%
of a total participant's compensation, the age requirement for
enrollment in the Plan was eliminated, and the vesting period
decreased from 7 years to 5 years.
The following description provides only general information. Participants
should refer to the Plan agreement for a more complete description.
(a) Contributions
Participants in the Plan may contribute on a tax-deferred basis
from 1% to 15% of their compensation, as defined by the Plan.
Participants may change their deferral percentage as of the first
payroll period following the quarterly valuation date. The Company
has made annual basic contributions equal to 3% of the compensation
paid to all eligible participants active at the end of the Plan
year and a matching contribution equal to 50% of the eligible
participant's tax-deferred contribution percentage for each payroll
period up to a maximum election of 6% per payroll period. In
addition, the Company may make discretionary profit sharing
contributions to the Plan in an amount determined by the Company's
Board of Directors. Company profit sharing contributions are limited
to 15% of a participant's compensation, less the participant's
tax-deferred contributions, the Company's basic contribution and
the Company matching contribution. Total Company and pretax
participant contributions may not exceed 15% of a total participant's
compensation. Total annual additions to a participant's account,
exclusive of adjustments to the fair market value of the participant's
fund account, may not exceed the lesser of $30,000 or 25% of the
participant's compensation.
(b) Vesting
Participants are 100% vested in their salary deferral contribution,
employer's basic contribution and rollover contribution accounts, and
become vested in profit sharing and matching contributions at the rate
of 25% per year after the completion of two years of service, or 100%
after reaching age 65, death or disability.
(c) Investment Options
Plan participants direct contributions in any increment in any of
the investment options. The options consist of the Harman International
Industries, Incorporated Common Stock, the Putnam Stable Value Fund,
Putnam Money Market Fund and 12 mutual funds sponsored by Putnam.
5
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
RETIREMENT SAVINGS PLAN
Notes to Financial Statements
June 26, 2001 and 2000
(d) Participant Account Balances
Separate accounts are maintained for each participant's salary
deferral, rollover, employer profit sharing, basic and matching
contribution balances. Earnings or losses of the Plan are allocated
to the participant account balances by investment fund on a daily
basis according to the number of shares in the participant account
balances. Company profit sharing and basic contributions are
allocated based on participant compensation. Company matching
contributions are allocated based upon each participant's
tax-deferred contribution percentage.
(e) Participant Loans
The Plan does not allow for any participant loans. The loans
discussed in note 1 arose from the mergers of related plans and no
further loans will be granted after their repayment is completed.
(f) Benefits
Upon separation from service, retirement at age 65, disability
retirement or death, participants or their beneficiaries are
entitled to receive their vested balances in a lump sum distribution.
However, participants from prior merged plans, whose plans allowed
distributions of plan benefits to be made in forms other than lump
sum, may elect payment of benefit balances which were available
prior to the mergers. Contributions made subsequent to the merger
may only be distributed in a lump sum payment.
(g) Forfeitures
All distributions from the Plan shall commence as soon as practicable
after the participant's termination date, and all unvested amounts
shall be forfeited as of the date of distribution. Amounts forfeited
by Plan participants are used to reduce the employer contributions.
Forfeitures were $288,008 and $438,122 for the years ended June 26,
2001 and 2000, respectively.
Amounts provisionally forfeited will be restored, if the participant
returns to service prior to the occurrence of a 60 consecutive month
period of separation.
6
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
RETIREMENT SAVINGS PLAN
Notes to Financial Statements
June 26, 2001 and 2000
(3) Investments
Investments (with investments in excess of 5% of net assets
separately identified) at June 26, 2001 and 2000 were as follows:
June 26
---------------------------
Description 2001 2000
------------ ------------
The Putnam Fund for Growth and Income $ 20,704,925 19,284,361
Putnam Voyager Fund 18,528,743 28,622,644
Putnam OTC & Emerging Growth Fund 3,052,170* 6,602,350
George Putnam Fund of Boston 6,287,613 7,102,849
Putnam Stable Value Fund 27,814,361 26,111,932
Harman International Industries, Incorporated
Common Stock (445,780 shares and
392,466 shares at June 26, 2001 and 2000,
respectively) 15,495,312 11,774,008
Putnam New Opportunities Fund 10,443,169 16,425,780
All other investments less than 5% 11,015,987 10,158,672
------------ ------------
$113,342,280 126,082,596
============ ============
* Represents less than 5% of net assets at June 26, 2001.
During the Plan year ended June 26, 2001, the Plan's investments
(including gains and losses on investments bought and sold, as well
as held during the year) depreciated in value by $25,608,419.
(4) Investment Contracts
Investment contracts are presented at contract value (cost plus
accrued interest), which approximates fair value, on the statement
of net assets available for plan benefits. The average yields and
crediting interest rates at June 26, 2001 and 2000 for the contracts
range from 5% to 7.5% and 5% to 8.3%, respectively. The crediting
interest rates are reset upon the maturity of the contracts.
(5) Federal Income Taxes
The Plan has received a favorable determination letter from the
Internal Revenue Service (IRS) dated October 23, 1998. The Plan
was amended and restated effective as of June 27, 2000. The Plan
Administrator believes the Plan, as amended, is currently being
operated in compliance with applicable requirements of the Internal
Revenue Code and exempt from federal income taxes.
7
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
RETIREMENT SAVINGS PLAN
Notes to Financial Statements
June 26, 2001 and 2000
(6) Plan Termination
Although it has not expressed any intent to do so, the Company
has the right to terminate the Plan subject to the provisions
of the Employee Retirement Income Security Act of 1974. Upon
Plan termination, all participant accounts immediately become
100% vested.
(7) Reconciliation to Form 5500
The following is a reconciliation of the changes in net assets
available for Plan benefits per the financial statements to
the Form 5500:
Year ended June 26
-----------------------------
2001 2000
------------- -------------
Net increase (decrease) per financial
statements $(10,639,025) 23,372,052
Add amounts allocated to withdrawing
participants at June 26, 1999 --- 1,863,171
------------- -------------
Net change per Form 5500 $(10,639,025) 25,235,223
============= =============
8
Schedule
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
RETIREMENT SAVINGS PLAN
Schedule of Assets (Held at End of Year)
June 26, 2001
Description of investment,
including maturity date
Identity of issuer, rate of interest, par or
borrower or similar party maturity date Current value
------------------------- ------------------------ --------------
Putnam Management
Company, Inc.* Money Market Fund $ 346,698
Mutual Funds:
Putnam Management
Company, Inc.* Asset Allocation Growth
Portfolio 743,499
Putnam Management
Company, Inc.* Asset Allocation
Balanced Portfolio 890,748
Putnam Management
Company, Inc.* Asset Allocation
Conservative Portfolio 462,442
Putnam Management
Company, Inc.* George Putnam Fund of
Boston 6,287,613
Putnam Management
Company, Inc.* Voyager Fund 18,528,743
Putnam Management
Company, Inc.* The Putnam Fund for
Growth and Income 20,704,925
Putnam Management
Company, Inc.* Investors Fund 3,414,418
Putnam Management
Company, Inc.* OTC & Emerging Growth
Fund 3,052,170
Putnam Management
Company, Inc.* Diversified Income &
Trust Fund 769,160
Putnam Management
Company, Inc.* S & P 500 Index Fund 838,060
Putnam Management
Company, Inc.* Overseas Growth Fund 3,550,962
Putnam Management
Company, Inc.* New Opportunities Fund 10,443,169
Putnam Management
Company, Inc.* Stable Value Fund -
invested in contracts with
various companies, with
various maturity dates and
interest rates ranging from
5% to 7.5% 27,814,361
Harman International
Industries Inc.* Common Stock 15,495,312
-------------
$ 113,342,280
=============
* Party-in-interest investment.
See accompanying independent auditors' report.
9