HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
RETIREMENT SAVINGS PLAN
Financial Statements and Supplemental Schedule
June 26, 2002 and 2001
(With Independent Auditors' Report Thereon)
WLA12275
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
RETIREMENT SAVINGS PLAN
Index to Financial Statements and Supplemental Schedule
Independent Auditors' Report 1
Statements of Net Assets Available for Plan Benefits
- June 26, 2002 and 2001 2
Statements of Changes in Net Assets Available for Plan Benefits
- Years ended June 26, 2002 and 2001 3
Notes to Financial Statements 4
Schedule
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
- June 26, 2002 8
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 the Harman International Industries, Incorporated Retirement
Savings Plan as of June 26, 2002 and 2001 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, 2002 and 2001 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.
Los Angeles, California
December 7, 2002
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
RETIREMENT SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
June 26, 2002 and 2001
2002 2001
------------ ------------
Assets:
Investments, at fair value (note 3):
Cash $ 22,145 ---
Money market 371,905 346,698
Mutual funds 60,758,056 69,685,909
Common stock 20,069,810 15,495,312
------------ ------------
81,221,916 85,527,919
------------ ------------
Investments, at contract value
- investment contract (notes 3 and 4) 32,110,661 27,814,361
------------ ------------
Total investments 113,332,577 113,342,280
------------ ------------
Contributions receivable:
Participant 10,003 47,523
Employer 6,572,925 6,377,661
------------ ------------
Total contributions receivable 6,582,928 6,425,184
------------ ------------
Net assets available for Plan benefits $119,915,505 119,767,464
------------ ------------
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, 2002 and 2001
2002 2001
------------ ------------
Additions to net assets attributed to:
Investment income (loss):
Net depreciation in fair value of investments $(10,174,848) (25,608,419)
Interest and dividends 3,395,691 8,448,421
Total investment loss ( 6,779,157) (17,159,998)
Contributions:
Employer 8,710,200 8,755,347
Participant 8,066,179 8,128,919
Rollovers 431,483 3,107,807
---------- ----------
Total contributions 17,207,862 19,992,073
---------- ----------
Total additions 10,428,705 2,832,075
---------- ----------
Deductions from net assets attributed to:
Benefit payments 10,280,664 13,455,693
Refund of excess contributions --- 6,587
Administrative expenses --- 8,820
---------- ----------
Total deductions 10,280,664 13,471,100
---------- ----------
Net increase (decrease) 148,041 (10,639,025)
Net assets available for Plan benefits:
Beginning of year 119,767,464 130,406,489
End of year $119,915,505 119,767,464
See accompanying notes to financial statements.
3
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
RETIREMENT SAVINGS PLAN
Notes to Financial Statements
June 26, 2002 and 2001
(1) Summary of Significant Accounting Policies
(a) Basis of Presentation
The accompanying financial statements of the Harman International
Industries, Incorporated (the Company) 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.
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).
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.
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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. For the year ended
2002, the board of directors approved a profit sharing contribution
equal to 2% of each participants compensation. 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, the Putnam Money Market Fund, and 12 mutual
funds sponsored by Putnam.
(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.
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(e) 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.
(f) 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.
Amounts provisionally forfeited will be restored if the participant
returns to service prior to the occurrence of a 60-consecutive-month
period of separation.
(3) Investments
Investments (with investments in excess of 5% of net assets separately
identified) at June 26, 2002 and 2001 were as follows:
June 26
---------------------------
Description 2002 2001
--------------------------------------- ---------------------------
The Putnam Fund for Growth and Income $ 17,716,918 20,704,925
Putnam Voyager Fund 14,494,999 18,528,743
George Putnam Fund of Boston 6,294,174 6,287,613
Putnam Stable Value Fund, at contract value 32,110,661 27,814,361
Harman International Industries, Incorporated
common stock (399,877 shares and 445,780 shares
at June 26, 2002 and 2001, respectively) 20,069,810 15,495,312
Putnam New Opportunities Fund 7,556,050 10,443,169
All other investments less than 5% 15,089,965 14,068,157
------------ -----------
$113,332,577 113,342,280
------------ -----------
6
During the Plan years ended June 26, 2002 and 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 $10,174,848
and $25,608,419, respectively:
(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, 2002 and 2001 for the contracts range from 5% to 7.5%.
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 is exempt from
federal income taxes.
(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.
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Schedule
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
RETIREMENT SAVINGS PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
June 26, 2002
Description of investment,
including maturity date,
Identity of issuer, rate of interest, par, or Current
borrower, or similar party maturity value value
--------------------------- ---------------------------- -------------
Putnam Management Company,Inc.* Cash $ 22,145
Putnam Management Company,Inc.* Money market fund 371,905
Mutual Funds:
Putnam Management Company,Inc.* Asset Allocation Growth Portfolio 1,205,952
Putnam Management Company,Inc.* Asset Allocation Balanced Portfolio 1,027,644
Putnam Management Company,Inc.* Asset Allocation Conservative Portfolio 710,211
Putnam Management Company,Inc.* George Putnam Fund of Boston 6,294,174
Putnam Management Company,Inc.* Voyager Fund 14,494,999
Putnam Management Company,Inc.* The Putnam Fund for Growth and Income 17,716,918
Putnam Management Company,Inc.* Investors Fund 2,967,392
Putnam Management Company,Inc.* OTC & Emerging Growth Fund 2,876,363
Putnam Management Company,Inc.* Diversified Income & Trust Fund 970,299
Putnam Management Company,Inc.* S & P 500 Index Fund 1,223,048
Putnam Management Company,Inc.* International Growth Fund 3,715,006
Putnam Management Company,Inc.* New Opportunities Fund 7,556,050
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% 32,110,661
Harman International Industries,Incorporated* Common stock 20,069,810
-------------
$ 113,332,577
-------------
* Party in interest investment.
See accompanying independent auditors' report.
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