11-K 1 a11k01.txt RETIREMENT SAVINGS PLAN 2001 AND 2000 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