10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2016

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

Commission File Number: 001-9764

Harman International Industries, Incorporated

(Exact name of registrant as specified in its charter)

Delaware	11-2534306
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
400 Atlantic Street, Suite 1500 Stamford, CT	06901
(Address of principal executive offices)	(Zip code)

(203) 328-3500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ☒  Yes    ☐  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    ☒  Yes    ☐  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☒		Accelerated filer	☐
Non-accelerated filer	☐	(Do not check if a smaller reporting company)	Smaller reporting company	☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ☐  Yes    ☒  No

As of January 24, 2017 69,893,450 shares of common stock, par value $.01, were outstanding.

HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES

Form 10-Q

December 31, 2016

Table of Contents

		Page
	Forward-Looking Statements	i
Part I	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets (Unaudited) December 31, 2016 and June 30, 2016	1
	Condensed Consolidated Statements of Income (Unaudited) Three and Six months ended December 31, 2016 and 2015	2
	Condensed Consolidated Statements of Comprehensive Income (Unaudited) Three and Six months ended December 31, 2016 and 2015	3
	Condensed Consolidated Statements of Cash Flows (Unaudited) Six months ended December 31, 2016 and 2015	4
	Notes to the Condensed Consolidated Financial Statements (Unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4.	Controls and Procedures	46
Part II	OTHER INFORMATION
Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 3.	Defaults Upon Senior Securities	48
Item 4.	Mine Safety Disclosures	48
Item 5.	Other Information	48
Item 6.	Exhibits	49
	Signatures	50

The page numbers in this Table of Contents reflect actual page numbers, not EDGAR page tag numbers.

References to “Harman,” the “Company,” “we,” “us,” and “our” in this Form 10-Q refer to Harman International Industries, Incorporated and its subsidiaries unless the context requires otherwise.

Harman, the Harman logo, and the Harman products and brand names referred to herein are either the trademarks or the registered trademarks of Harman. All other trademarks are the property of their respective owners.

Forward-Looking Statements

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You should not place undue reliance on these statements. Forward-looking statements include information concerning possible or assumed future results of operations, cash flows, capital expenditures, the outcome of pending legal proceedings and claims, goals and objectives for future operations, including descriptions of our business strategies and purchase commitments from customers. These statements are typically identified by words such as “believe,” “anticipate,” “expect,” “plan,” “intend,” “estimate,” “should,” “will” and similar expressions. We base these statements on particular assumptions that we have made in light of our industry experience, as well as our perception of historical trends, current conditions, expected future developments and other factors that we believe are appropriate under the circumstances. As you read and consider the information in this report, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties and assumptions. In light of these risks, uncertainties and assumptions, we cannot assure you that the results and events contemplated by the forward-looking statements contained in, or incorporated by reference into, this report will in fact transpire.

You should carefully consider the risks described below and the other information in this report because they identify important factors that could cause actual results to differ materially from those predicted in any such forward-looking statements. Our operating results may fluctuate significantly and may not meet our expectations or those of securities analysts or investors. The price of our stock would likely decline if this occurs. Factors that may cause fluctuations in our operating results include, but are not limited to, the following:

• the loss of one or more significant customers, the loss of a significant platform with an automotive customer or the in-sourcing of certain services by our automotive customers;

• our ability to maintain a competitive technological advantage through innovation and leading product designs;

• our ability to maintain profitability if there are delays in our product launches or increased pricing pressure from our customers;

• fluctuations in currency exchange rates, particularly with respect to the value of the U.S. Dollar and the Euro;

• the inability of our suppliers to deliver materials, parts and components including, without limitation, microchips and displays, at the scheduled rate and disruptions arising in connection therewith;

• fluctuations in the price and supply of raw materials including, without limitation, petroleum, copper, steel, aluminum, synthetic resins, rare metals and rare-earth minerals, or shortages of materials, parts and components;

• our failure to protect the security of our products and systems against cyber crime; and

• our failure to maintain the value of our brands and implementing a sufficient brand protection program.

In addition, we may be subject to certain risks during the pendency of the announced transaction with Samsung Electronics Co. Ltd., and may not be able to complete the proposed transaction on the terms set forth in the merger agreement or other acceptable terms or at all because of a number of factors, including without limitation (i) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement, (ii) the failure to obtain the requisite approval of our stockholders or the failure to satisfy the other closing conditions, (iii) risks related to disruption of management’s attention from our ongoing business operations due to the pending transaction and (iv) the effect of the announcement of the pending transaction on our ability to retain and hire key personnel, maintain relationships with our customers and suppliers, and maintain our operating results and business generally.  Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual results of operations and could cause actual results to differ materially from those expressed in the forward-looking statements. As a result, the foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this and other reports we file with the Securities and Exchange Commission. For additional information regarding certain factors that may cause our actual results to differ from those expected or anticipated see the information under the caption “Risk Factors” which is located in Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year ended June 30, 2016. We undertake no obligation to publicly update or revise any forward-looking statement (except as required by law). This report also makes reference to our awarded business, which represents the estimated future lifetime net sales for all our automotive customers. Our awarded business does not represent firm customer orders. We report our awarded business primarily based on written award letters from our customers. To validate these awards, we use various assumptions including global vehicle production forecasts, customer take rates for our products, revisions to product life-cycle estimates and the impact of annual price reductions and exchange rates, among other factors. The term “take rate” represents the number of units sold by us divided by an estimate of the total number of vehicles of a specific vehicle line produced during the same timeframe. The assumptions we use to validate these awards are updated and reported externally on an annual basis.

i

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands)	December 31, 2016			June 30, 2016
Assets
Current assets
Cash and cash equivalents	$	683,351		$	602,300
Receivables, net		1,195,761			1,122,920
Inventories		787,559			706,084
Other current assets		584,653			487,151
Total current assets		3,251,324			2,918,455
Property, plant and equipment, net		579,039			593,290
Intangible assets, net		435,930			476,284
Goodwill		1,500,499			1,510,279
Deferred tax assets, net		131,681			140,181
Other assets		433,150			409,380
Total assets	$	6,331,623		$	6,047,869
Liabilities and Equity
Current liabilities
Current portion of long-term debt	$	55,543		$	86,641
Short-term debt		2,832			-
Accounts payable		1,001,822			867,279
Accrued liabilities		724,759			670,746
Accrued warranties		185,656			178,367
Income taxes payable		40,762			28,773
Total current liabilities		2,011,374			1,831,806
Borrowings under revolving credit facility		513,000			523,000
Long-term debt		766,601			787,333
Pension liability		210,471			216,016
Other non-current liabilities		253,718			237,241
Total liabilities		3,755,164			3,595,396
Commitments and contingencies		-			-
Preferred stock		-			-
Common stock		1,017			1,012
Additional paid-in capital		1,460,686			1,410,765
Accumulated other comprehensive income		(100,930	)		(77,241	)
Retained earnings		2,643,487			2,490,570
Less: Common stock held in treasury		(1,427,801	)		(1,372,633	)
Total equity		2,576,459			2,452,473
Total liabilities and equity	$	6,331,623		$	6,047,869

See accompanying Notes to the Condensed Consolidated Financial Statements.

1

HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except earnings per share data)	Three Months Ended December 31,				Six Months Ended December 31,
	2016		2015		2016			2015
Net sales	$	1,947,474	$	1,772,157	$	3,706,996		$	3,403,045
Cost of sales		1,339,513		1,227,065		2,557,764			2,370,555
Gross profit		607,961		545,092		1,149,232			1,032,490
Selling, general and administrative expenses		433,947		385,939		824,407			741,870
Operating income		174,014		159,153		324,825			290,620
Other expenses:
Interest expense, net		9,214		7,666		18,538			15,925
Foreign exchange losses (gains), net		2,365		887		1,398			(958	)
Miscellaneous, net		1,916		4,363		4,811			8,350
Income before income taxes		160,519		146,237		300,078			267,303
Income tax expense, net		60,865		33,050		98,288			66,600
Equity in loss (income) of unconsolidated subsidiaries		205		-		(776	)		-
Net income		99,449		113,187		202,566			200,703
Net income attributable to non-controlling interest		-		289		-			707
Net income attributable to Harman International Industries,    Incorporated	$	99,449	$	112,898	$	202,566		$	199,996
Earnings per share:
Basic	$	1.40	$	1.57	$	2.86		$	2.78
Diluted	$	1.39	$	1.55	$	2.83		$	2.76
Weighted average shares outstanding:
Basic		70,986		72,079		70,938			72,060
Diluted		71,712		72,830		71,510			72,549

See accompanying Notes to the Condensed Consolidated Financial Statements.

2

HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)	Three Months Ended December 31,						Six Months Ended December 31,
	2016			2015			2016			2015
Net income	$	99,449		$	113,187		$	202,566		$	200,703
Net income attributable to non-controlling interest		-			289			-			707
Net income attributable to Harman International Industries,    Incorporated	$	99,449		$	112,898		$	202,566		$	199,996
Other comprehensive loss, net of taxes(1):
Foreign currency translation		(46,751	)		(19,924	)		(43,360	)		(53,247	)
Change in hedging derivatives, net of taxes		33,447			16,301			15,648			6,718
Pension liability adjustment, net of taxes		3,010			2,018			3,475			1,335
Unrealized (losses) gains on available for sale securities		(468	)		34			548			(51	)
Other comprehensive loss, net of taxes attributable to    Harman International Industries, Incorporated		(10,762	)		(1,571	)		(23,689	)		(45,245	)
Comprehensive income, net of taxes		88,687			111,616			178,877			155,458
Comprehensive income, net of taxes attributable to    non-controlling interest		-			289			-			707
Comprehensive income, net of taxes attributable to Harman    International Industries, Incorporated	$	88,687		$	111,327		$	178,877		$	154,751

⁽¹⁾ Refer to Note 15 – Other Comprehensive Income (Loss) for more information.

See accompanying Notes to the Condensed Consolidated Financial Statements.

3

HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)	Six Months Ended December 31,
	2016			2015
Cash flows from operating activities:
Net income	$	202,566		$	200,703
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		103,780			114,837
Deferred income taxes		3,918			30,519
Loss on disposition of assets		1,093			471
Share-based compensation		30,058			20,941
Excess tax benefit from share-based compensation		(27,309	)		(1,958	)
Non-cash interest expense		1,885			1,396
Non-cash increase in contingent consideration		15,332			913
Changes in operating assets and liabilities, exclusive of impact of acquisitions:
(Increase) decrease in:
Receivables, net		(99,556	)		(32,576	)
Inventories		(98,686	)		(197,836	)
Other current assets		(60,033	)		(38,602	)
Pre-production and development costs		(11,306	)		(33,266	)
Increase (decrease) in:
Accounts payable		158,764			(21,130	)
Accrued warranties		15,432			4,819
Accrued other liabilities		60,039			39,714
Income taxes payable		17,918			(50,711	)
Net change in derivative assets and liabilities		(14,478	)		(11,320	)
Other operating activities		11,100			(7,143	)
Net cash provided by operating activities		310,517			19,771
Cash flows from investing activities:
Acquisitions, net of cash received		(1,385	)		(619	)
Capital expenditures		(71,071	)		(87,352	)
Proceeds from asset dispositions		2,703			50
Purchase of convertible debt security		(15,000	)		-
Other items, net		(2,511	)		1,042
Net cash used in investing activities		(87,264	)		(86,879	)
Cash flows from financing activities:
Increase in short-term borrowings		2,788			340
Borrowings of long-term debt		80,000			-
Repayments of long-term debt		(91,193	)		(26,259	)
Cash dividends to shareholders		(49,815	)		(50,172	)
Repurchase of common stock		(55,168	)		(50,009	)
Exercise of stock options		7,489			5,527
Repurchases related to share-based compensation arrangements		(14,930	)		(11,861	)
Excess tax benefit from share-based compensation		27,309			1,958
Payment of contingent consideration		(30,170	)		(327	)
Other items, net		(5,446	)		(2,310	)
Net cash used in financing activities		(129,136	)		(133,113	)
Effect of exchange rate changes on cash		(13,066	)		(11,756	)
Net increase in cash and cash equivalents		81,051			(211,977	)
Cash and cash equivalents at beginning of period		602,300			649,513
Cash and cash equivalents at end of period	$	683,351		$	437,536
Supplemental disclosure of cash flow information:
Interest paid, net	$	12,881		$	10,736
Income taxes paid	$	78,047		$	45,851

See accompanying Notes to the Condensed Consolidated Financial Statements.

4

HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

(In thousands, except per-share data and where otherwise noted)

(Unaudited)

Note 1 – Basis of Presentation

Basis of Presentation

References to “we,” “us,” “our,” the “company” and “Harman” refer to Harman International Industries, Incorporated and its consolidated subsidiaries unless the context specifically requires otherwise.

Our unaudited, condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. These unaudited condensed consolidated financial statements have been prepared in accordance with the accounting policies described in our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2016 (our “2016 Annual Report”) and do not include all information and footnote disclosures included in our audited financial statements. In the opinion of management, the accompanying unaudited, condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments and accruals, necessary to present fairly, in all material respects, the consolidated financial condition, results of operations and cash flows for the periods presented. Operating results for the three and six months ended December 31, 2016 are not necessarily indicative of the results that may be expected for the full fiscal year ending June 30, 2017 due to seasonal, economic and other factors. Where necessary, information for prior periods has been reclassified to conform to the condensed consolidated financial statement presentation in the current fiscal year. These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes included in our 2016 Annual Report.

Effective July 1, 2016, we revised our business segments in order to better align them with our strategic approach to the markets and customers we serve. Refer to Note 18 – Business Segment Data for more information. Prior period segment amounts throughout the Notes to the Condensed Consolidated Financial Statements have been reclassified to the new segment structure. The reclassification of historical business segment information had no impact on our basic financial statements.

The methods, estimates and judgments we use in applying our accounting policies, in conformity with generally accepted accounting principles in the United States (“GAAP”), have a significant impact on the results we report in our financial statements. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. The estimates affect the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.

Note 2 – New Accounting Standards

Recently Adopted Accounting Standards

Imputation of Interest: In August 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-15, “Interest – Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements,” which clarifies the presentation and subsequent measurement of debt issuance costs associated with lines of credit. Under the new guidance, these costs may be presented as an asset and amortized ratably over the term of the line-of-credit arrangement, regardless of whether there are outstanding borrowings on the arrangement. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued. We adopted the provisions of this new guidance on July 1, 2016 on a retrospective basis. The adoption of the new provisions did not have any impact on our financial condition or results of operations.

In April 2015, the FASB issued ASU No. 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs,” which changes the presentation requirements for debt issuance costs and debt discount and premium. The new guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the new guidance. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued. We adopted the provisions of this new guidance on July 1, 2016 on a retrospective basis. The adoption of the new provisions resulted in a reclassification of $6.2 million which reduced both Other assets and Long-term debt in our Condensed Consolidated Balance Sheets. The adoption of the new provision did not have any impact on our results of operations.

5

Extraordinary Items: In January 2015, the FASB issued ASU 2015-01, “Income Statement – Extraordinary and Unusual Items (Subtopic 225-20),” which eliminates the concept of extraordinary items. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2015. The new guidance is to be applied prospectively but may also be applied retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. We adopted the provisions of this new guidance on July 1, 2016. The adoption of the new provisions did not have any impact on our financial condition or results of operations.

Recently Issued Accounting Standards

Business Combinations: In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2017. Early adoption is permitted for financial statements that have not been previously issued. We expect to adopt the provisions of this new guidance on July 1, 2018. The provisions in this guidance will be applied on a prospective basis. We do not expect the adoption of the new provisions to have a material impact on our financial condition or results of operations.

Income Taxes: In October 2016, the FASB issued ASU No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory,” which requires the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2017. Early adoption is permitted for financial statements that have not been previously issued. We expect to adopt the provisions of this new guidance on July 1, 2018. The provisions in this guidance will be applied on a modified retrospective basis. We are currently assessing the impact the adoption of the new provisions will have on our financial condition and results of operations.

Cash Flows: In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash" which clarifies the guidance on the classification and presentation of restricted cash in the statement of cash flows. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2017. Early adoption is permitted for financial statements that have not been previously issued. We expect to adopt the provisions of this new guidance on July 1, 2018. The provisions in this guidance will be applied on a retrospective basis. We do not expect the adoption of the new provisions to have a material impact on our statement of cash flows.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows: Clarification of Certain Cash Receipts and Cash Payments,” which eliminates the diversity in practice related to the classification of certain cash receipts and payments in the statement of cash flows, by adding or clarifying guidance on eight specific cash flow issues. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2017. Early adoption is permitted for financial statements that have not been previously issued. We expect to adopt the provisions of this new guidance on July 1, 2018. The provisions in this guidance will be applied on a retrospective basis. We are currently assessing the impact the adoption of the new provisions will have on our statement of cash flows.

Share-Based Payments: In March 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” which simplifies how share-based payments are accounted for and presented in the consolidated financial statements. The guidance amends certain income tax consequences for share-based payments, the accounting for forfeitures, the classification of share-based awards, and the classification of share-based payments in the statement of cash flows.  The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2016. Early adoption is permitted for financial statements that have not been previously issued. We expect to adopt the provisions of this new guidance on July 1, 2017. The provisions in this guidance will be applied on a prospective basis. We are currently assessing the impact the adoption of the new provisions will have on our financial condition and results of operations.

Derivatives: In March 2016, the FASB issued ASU No. 2016-05, “Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships,” which clarifies existing guidance on the designation of hedging instruments. Under the new guidance, a change in the counterparty to a derivative instrument that has been designated as a hedging instrument would not require dedesignation of that hedging relationship, provided that all other hedge accounting criteria continues to be met. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2016. Early adoption is permitted for financial statements that have not been previously issued. We expect to adopt the provisions of this new guidance on July 1, 2017. The provisions in this guidance can be applied on either a prospective basis or a modified retrospective basis. We do not expect the adoption of the new provisions to have a material impact on our financial condition or results of operations.

6

Leases: In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which increases transparency and comparability by requiring a lessee to record a right-of-use asset and lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification determining whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. ASU No. 2016-02 is effective for fiscal years and interim periods within those years beginning after December 15, 2018. Early adoption is permitted for financial statements that have not been previously issued. We expect to adopt the provisions of this new guidance on July 1, 2019. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are currently assessing the impact the adoption of the new provisions will have on our financial condition and results of operations.

Financial Instruments: In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,”which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2019. Early adoption is permitted for fiscal years and interim periods within those years beginning after December 15, 2018. We expect to adopt the provisions of this new guidance on July 1, 2020. We are currently assessing the impact the adoption of the new provisions will have on our financial condition and results of operations.

In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities,” which changes the guidance on the classification and measurement of financial instruments related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. It also amends certain disclosure requirements associated with the fair value of financial instruments. Under the new guidance, equity investments (excluding those accounted for under the equity method or those that result in consolidation) will be measured at fair value, with changes in fair value recognized in net income.  For financial liabilities that an entity has elected to measure at fair value in accordance with the fair value option guidance, the amendments require an entity to present separately in other comprehensive income the portion of the change in fair value that results from a change in instrument-specific credit risk. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2017. Early adoption is permitted for financial statements that have not been previously issued. We expect to adopt the provisions of this new guidance on July 1, 2018. We do not expect the adoption of the new provisions to have a material impact on our financial condition or results of operations.

Inventory: In July 2015, the FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory,” which states that inventory should be measured at the lower of cost and net realizable value. Net realizable value is defined as estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The new guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2016. We expect to adopt the provisions of this new guidance on July 1, 2017. The new guidance should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. We are currently assessing the impact the adoption of the new provisions will have on our financial condition and results of operations.

Revenue Recognition: In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” which amends the guidance for revenue recognition to replace numerous, industry-specific requirements and converges areas under this topic with those of the International Financial Reporting Standards. The new guidance implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The new guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. ASU No. 2014-09, as amended by ASU No. 2015-14, ASU No. 2016-08, ASU No. 2016-10, ASU No. 2016-12, and ASU No. 2016-20, is effective for fiscal years beginning after December 15, 2017. We expect to adopt the provisions of this new guidance on July 1, 2018. Entities can transition to the new standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. We are currently assessing the impact the adoption of the new provisions will have on our financial condition and results of operations, as well as the method of adoption.

Revenue Recognition and Derivatives: In May 2016, the FASB issued ASU No. 2016-11, “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting,”  which rescinds certain SEC comments that are codified in Topic 605 and Topic 815.  These rescissions include changes to accounting for shipping and handling fees and costs, accounting for consideration given by a vendor to a customer, and accounting to determine the nature of a host contract related to a hybrid financial instrument issued in the form of a share. ASU No. 2016-11 is effective for fiscal years beginning after December 15, 2017. We expect to adopt the provisions of this new guidance on July 1, 2018. We do not expect the adoption of the new provisions to have a material impact on our financial condition or results of operations.

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Note 3 – Allowance for Doubtful Accounts

We reserve an estimated amount for accounts receivable that may not be collected. Methodologies for estimating the allowance for doubtful accounts are based primarily on specific identification of uncollectible accounts. Historical collection rates and customer credit worthiness are considered in determining specific reserves. At December 31, 2016 and June 30, 2016, we had $17.8 million and $20.2 million, respectively, reserved for possible uncollectible accounts receivable.

Note 4 – Inventories

At December 31, 2016 and June 30, 2016, inventories consisted of the following:

	December 31, 2016		June 30, 2016
Finished goods	$	377,954	$	303,271
Work in process		78,011		80,972
Raw materials		331,594		321,841
Inventories	$	787,559	$	706,084

At December 31, 2016 and June 30, 2016, our inventory reserves were $97.5 million and $93.9 million, respectively.

Note 5 – Property, Plant and Equipment, net

Property, plant and equipment, net consisted of the following:

	Estimated Useful Lives (in Years)	December 31, 2016			June 30, 2016
Land		$	9,274		$	9,504
Buildings and improvements	1-50		265,829			269,619
Machinery and equipment	3-20		1,355,527			1,341,816
Furniture and fixtures	3-10		28,882			28,251
Property, plant and equipment, gross			1,659,512			1,649,190
Less accumulated depreciation and amortization			(1,080,473	)		(1,055,900	)
Property, plant and equipment, net		$	579,039		$	593,290

Depreciation expense for the three months ended December 31, 2016 and 2015 was $37.4 million and $35.0 million, respectively, and was $73.1 million and $70.8 million for the six months ended December 31, 2016 and 2015, respectively.  

Note 6 – Accrued Warranties

Details of our accrued warranties are as follows:

	Six Months Ended December 31,
	2016			2015
Accrued warranties, June 30,	$	178,367		$	163,331
Warranty expense		47,089			31,647
Warranty payments (cash or in-kind)		(32,106	)		(26,005	)
Other(1)		(7,694	)		(4,226	)
Accrued warranties, December 31,	$	185,656		$	164,747

⁽¹⁾ Other primarily represents foreign currency translation.

Note 7 – Earnings Per Share

We apply the two-class method when computing earnings per share, which requires that net income per share for each class of shares entitled to dividends be calculated assuming all of our net income is distributed as dividends to these shareholders based on their contractual rights.

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The following table presents the calculation of basic and diluted earnings per share of common stock outstanding:

	Three Months Ended December 31,
	2016				2015
	Basic		Diluted		Basic		Diluted
Numerator for Basic and Diluted Earnings per Share:
Net income	$	99,449	$	99,449	$	113,187	$	113,187
Net income attributable to non-controlling interest		-		-		289		289
Net income attributable to Harman International Industries,    Incorporated	$	99,449	$	99,449	$	112,898	$	112,898
Denominator for Basic and Diluted Earnings per Share:
Weighted average shares outstanding		70,986		70,986		72,079		72,079
Employee stock options		-		726		-		751
Total weighted average shares outstanding		70,986		71,712		72,079		72,830
Earnings per Share:
Earnings per share	$	1.40	$	1.39	$	1.57	$	1.55

	Six Months Ended December 31,
	2016				2015
	Basic		Diluted		Basic		Diluted
Numerator for Basic and Diluted Earnings per Share:
Net income	$	202,566	$	202,566	$	200,703	$	200,703
Net income attributable to noncontrolling interest		-		-		707		707
Net income attributable to Harman International Industries,    Incorporated	$	202,566	$	202,566	$	199,996	$	199,996
Denominator for Basic and Diluted Earnings per Share:
Weighted average shares outstanding		70,938		70,938		72,060		72,060
Employee stock options		-		572		-		489
Total weighted average shares outstanding		70,938		71,510		72,060		72,549
Earnings per Share:
Earnings per share	$	2.86	$	2.83	$	2.78	$	2.76

Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are considered participating securities, as defined under GAAP, and are included in the computation of earnings per share pursuant to the two-class method.

Certain options were outstanding and not included in the computation of diluted net earnings per share because the assumed exercise of these options would have been antidilutive. Options to purchase 154,258 and 191,519 shares of our common stock for the three months ended December 31, 2016 and 2015, respectively, were outstanding and were excluded from the computation of diluted earnings per share as they would have been antidilutive. For the three months ended December 31, 2016 and 2015, there were no restricted stock units outstanding that were excluded from the computation of diluted earnings per share. Options to purchase 154,258 and 191,519 shares of our common stock for the six months ended December 31, 2016 and 2015, respectively, were outstanding and were excluded from the computation of diluted earnings per share as they would have been antidilutive. In addition, 144,535 and 263,392 restricted stock units for the six months ended December 31, 2016 and 2015, respectively, were outstanding and were excluded from the computation of diluted earnings per share as they also would have been antidilutive.

Note 8 – Goodwill and Intangible Assets, Net

Goodwill

Goodwill was $1.500 billion at December 31, 2016 compared with $1.510 billion at June 30, 2016. The decrease in goodwill in the six months ended December 31, 2016 versus June 30, 2016 was primarily associated with unfavorable foreign currency translation of $9.7 million and a decrease of $0.1 million in connection with the acquisition of TowerSec Ltd. (“TowerSec”).

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As discussed in Note 18 – Business Segment Data, we revised our segment and reporting unit structure effective July 1, 2016. Under this new structure, our Lifestyle Audio segment will now contain our car audio aftermarket services business which was previously included in our Connected Services segment. Our reporting units are the same as our reportable segments with the exception of Lifestyle Audio, which consists of two reporting units, car audio and consumer audio. In connection with this realignment, we reallocated our goodwill based on our new reporting structure based on each reporting unit’s relative fair value. We also performed a goodwill impairment test as of July 1, 2016 using our new reporting units structure. We determined that the fair value of each of our reporting units exceeded its carrying value and, as such, no impairments were deemed to exist as of this date.

The changes in the carrying amount of goodwill by business segment for the six months ended December 31, 2016 were as follows:

	Connected Car			Lifestyle Audio			Professional Solutions			Connected Services			Total
Balance, June 30, 2016	$	164,771		$	147,977		$	385,609		$	811,922		$	1,510,279
Realignment adjustments(1)		-			9,623			-			(9,623	)		-
Balance, June 30, 2016 – adjusted		164,771			157,600			385,609			802,299			1,510,279
Acquisitions and adjustments(2)		(100	)					(5	)					(105	)
Other adjustments(3)		(4,936	)		(1,628	)		(756	)		(2,355	)		(9,675	)
Balance, December 31, 2016	$	159,735		$	155,972		$	384,848		$	799,944		$	1,500,499

⁽¹⁾ The realignment adjustments reallocate our goodwill based on our new reporting structure based on the relative fair value of each reporting unit.

⁽²⁾ Refer to Note 22—Acquisitions for more information.

⁽³⁾ The other adjustments to goodwill primarily consist of foreign currency translation adjustments.

We did not recognize any goodwill impairment charges in our Condensed Consolidated Statements of Income in the three and six months ended December 31, 2016 and 2015.

The contingent purchase price associated with the acquisition of innovative Systems GmbH (“IS”) is calculated pursuant to the terms of an agreement between the parties. Certain terms of the agreement are currently subject to a dispute between certain parties and the matter has been submitted to arbitration.

On June 22, 2016, we executed an agreement with certain parties that previously owned 80.05% of IS (the “80.05% Shareholders”) to settle the remaining disputed matters with the 80.05% Shareholders that had been submitted to arbitration related to the contingent purchase price associated with our acquisition of IS. Under the terms of the agreement, we will pay the 80.05% Shareholders €76.8 million (the “IS Obligation”), with an initial payment of €24.8 million which was paid in July 2016 and four installment payments of €13 million due every July 1^st from 2017 through 2020.  In fiscal year 2016, we recorded approximately $74.5 million of additional contingent purchase price for this IS Obligation as an increase to goodwill. The agreement includes an option that, if exercised by the 80.05% Shareholders, would require us to make selected installment payments early, subject to an eight percent discount rate.  The existence of this option effectively makes this obligation due on demand and it has therefore been included in our Condensed Consolidated Balance Sheets in Current portion of long-term debt. Until such time as the disputed matters with the remaining shareholders that previously owned 19.95% of IS are resolved, we cannot calculate the contingent purchase price related to the acquisition of IS. Refer to Note 9—Debt for more information.

Intangible Assets, Net

Net intangible assets were $435.9 million and $476.3 million at December 31, 2016 and June 30, 2016, respectively, and were comprised of the following:

		December 31, 2016							June 30, 2016
	Weighted Average Amortization	Gross Carrying Amount		Accumulated Amortization			Net Amount		Gross Carrying Amount		Accumulated Amortization			Net Amount
Customer relationships	12 Years	$	386,686	$	(103,008	)	$	283,678	$	386,787	$	(75,957	)	$	310,830
Technology	6 Years		75,543		(33,946	)		41,597		75,431		(27,645	)		47,786
Patents	15 Years		7,256		(2,086	)		5,170		7,256		(1,584	)		5,672
Trade names(1)	-		100,617		(26,267	)		74,350		100,617		(26,231	)		74,386
Non-compete agreement	4 Years		3,146		(2,330	)		816		3,146		(2,060	)		1,086
Software	5 Years		44,219		(15,896	)		28,323		45,682		(11,945	)		33,737
Other	4 Years		10,491		(8,495	)		1,996		10,490		(7,703	)		2,787
Total		$	627,958	$	(192,028	)	$	435,930	$	629,409	$	(153,125	)	$	476,284

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⁽¹⁾ Includes $55.7 million and $18.5 million of indefinite-lived intangible assets related to the acquisition of AMX LLC and AMX Holding Corporation (collectively “AMX”) and Martin Professional A/S, respectively.

Amortization expense related to intangible assets was $15.2 million and $23.0 million for the three months ended December 31, 2016 and 2015, respectively, and was $30.7 million and $44.1 million for the six months ended December 31, 2016 and 2015, respectively.

Amortization expense in each of the next five fiscal years and thereafter is expected to approximate the following:

2017	$	32,117
2018		59,567
2019		55,268
2020		50,194
2021		47,371
Thereafter		117,062
Total	$	361,579

Note 9 – Debt

Short Term Borrowings

At December 31, 2016 and June 30, 2016 we had $2.8 million and $0 of short-term borrowings outstanding, respectively. At December 31, 2016 and June 30, 2016, we maintained lines of credit of $47.5 million and $53.4 million, respectively, primarily in India, China, Brazil, Israel and Denmark.

We classify our debt based on the contractual maturity dates of the underlying debt instruments. We defer costs associated with debt issuance over the applicable term of the debt. These costs are amortized to Interest expense, net in our Condensed Consolidated Statements of Income.

Issuance of 2.000 Percent Senior Notes

On May 27, 2015, we completed a public offering of €350.0 million in aggregate principal amount of Euro-denominated 2.000 percent Senior Notes due 2022 (the “2.000 Percent Senior Notes”), issued by Harman Finance International, S.C.A. (“Harman Finance”), which are fully and unconditionally guaranteed by Harman. Harman Finance is a wholly-owned finance subsidiary and has no independent activities, assets or operations other than in connection with the 2.000 Percent Senior Notes. The 2.000 Percent Senior Notes bear interest at a rate of 2.000 percent per year, payable annually in arrears on May 27 of each year, commencing on May 27, 2016 and will mature on May 27, 2022. The 2.000 Percent Senior Notes were issued at 99.613 percent of par value, reflecting a discount of €1.4 million to the aggregate principal amount, which is being amortized to Interest expense, net in our Condensed Consolidated Statements of Income using the effective interest method, over the term of the 2.000 Percent Senior Notes. We incurred €2.6 million of debt issuance costs in connection with the 2.000 Percent Senior Notes which are being amortized to Interest expense, net in our Condensed Consolidated Statements of Income using the effective interest method, over the term of the 2.000 Percent Senior Notes. The net proceeds from the issuance of the 2.000 Percent Notes were €346.0 million, net of the discount and debt issuance costs. The effective interest related to the 2.000 Percent Senior Notes, based on the net proceeds received is 2.060 percent. The 2.000 Percent Senior Notes were issued under an indenture, dated as of May 27, 2015, by and between Harman Finance, Harman, as guarantor, and a trustee, as supplemented by the first supplemental indenture, dated as of May 27, 2015, by and among Harman Finance, Harman, as guarantor, and a trustee (as supplemented, the “2.000 Percent Senior Notes Indenture”). All payments of interest and principal, including payments made upon any redemption of the 2.000 Percent Senior Notes, will be made in Euros, subject to certain exceptions if the Euro is unavailable.

Issuance of 4.150 Percent Senior Notes

On May 11, 2015, we completed a public offering of $400.0 million in aggregate principal amount of U.S. Dollar denominated 4.150 Percent Senior Notes due 2025 (the “4.150 Percent Senior Notes”) issued by Harman. The 4.150 Percent Senior Notes bear interest at a rate of 4.150 percent per year, payable semi-annually in arrears on May 15 and November 15 of each year, commencing on November 15, 2015, and will mature on May 15, 2025. The 4.150 Percent Senior Notes were issued at 99.336 percent of par value, reflecting a discount of $2.7 million to the aggregate principal amount, which is being amortized to Interest expense, net in our Condensed Consolidated Statements of Income using the effective interest method, over the term of the 4.150 Percent Senior Notes. We incurred $3.8 million of debt issuance costs in connection with the 4.150 Percent Senior Notes which are being amortized to Interest expense, net in our Condensed Consolidated Statements of Income using the effective interest method, over the term of the

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4.150 Percent Senior Notes. The net proceeds from the issuance of the 4.150 Percent Senior Notes were $393.5 million, net of the discount and debt issuance costs. The effective interest related to the 4.150 Percent Senior Notes, based on the net proceeds received is 4.232 percent. The 4.150 Percent Senior Notes were issued under an indenture, dated as of May 11, 2015, by and between Harman and a trustee, as supplemented by the first supplemental indenture, dated as of May 11, 2015, by and between Harman and a trustee (as supplemented, the “4.150 Percent Senior Notes Indenture”).

2015 Credit Agreement

On March 26, 2015 we and our wholly-owned subsidiary Harman Holding GmbH & Co. KG (“Harman KG”), entered into a Multi-Currency Credit Agreement with a group of banks (the “2015 Credit Agreement”). The 2015 Credit Agreement provides for a five-year unsecured multi-currency revolving credit facility in the amount of $1.2 billion (the “Aggregate Commitment”) with availability in currencies other than the U.S. Dollar of up to $750.0 million. Up to $50.0 million of the Aggregate Commitment is available for letters of credit. Subject to certain conditions set forth in the 2015 Credit Agreement, the Aggregate Commitment may be increased by up to $500.0 million. However, there is presently no commitment for this additional borrowing ability. We may select interest rates for borrowings under the 2015 Credit Agreement equal to (i) the LIBO rate plus an applicable margin, (ii) the EURIBO rate plus an applicable margin, or (iii) a base rate plus an applicable margin, which in each case is based on ratings which are established by Standard & Poor’s Ratings Services (“S&P”) and Moody’s Investor Services (“Moody’s”). We pay a facility fee on the Aggregate Commitment, whether drawn or undrawn, which is also determined based on our ratings which are established by S&P and Moody’s.

At December 31, 2016 and June 30, 2016, there was approximately $513.0 million and $523.0 million, respectively, of outstanding borrowings, which are included in our Condensed Consolidated Balance Sheets as Borrowings under revolving credit facility. At December 31, 2016 and June 30, 2016 there were $4.1 million of outstanding letters of credit under the 2015 Credit Agreement. At December 31, 2016 and June 30, 2016, unused available credit under the 2015 Credit Agreement was $682.9 million and $672.9 million, respectively. In connection with the 2015 Credit Agreement, we incurred $3.0 million of fees and other expenses which are being amortized over the term of the 2015 Credit Agreement to Interest expense, net in our Condensed Consolidated Statements of Income on a straight-line basis.

IS Obligation

On June 22, 2016, we executed an agreement with the 80.05% Shareholders to settle with them the disputed matters related to the contingent purchase price associated with our acquisition of IS that had been submitted to arbitration. Under the terms of the agreement, we will pay the IS Obligation in accordance with the following schedule: an initial payment of €24.8 million which was paid in July 2016 and four installment payments of €13 million due every July 1^st from 2017 through 2020. The agreement includes an option that, if exercised by the 80.05% Shareholders, would require us to make selected installment payments early, subject to an eight percent discount rate.  The existence of this option effectively makes this obligation due on demand and it has therefore been included in our Condensed Consolidated Balance Sheets in Current portion of long-term debt.  Refer to Note 8-Goodwill and Intangible Assets, Net for more information.

At December 31, 2016 and June 30, 2016, total debt consisted of the following:

	Fair Value at December 31, 2016 (1)			Book Value at December 31, 2016			Fair Value at June 30, 2016 (1)			Book Value at June 30, 2016
Short-term debt	$	2,832		$	2,832		$	-		$	-
4.150 Percent Senior Notes		398,480			400,000			417,440			400,000
2.000 Percent Senior Notes		388,046			368,096			390,654			388,710
Borrowings under revolving credit facility		513,000			513,000			523,000			523,000
IS Obligation (2)		52,742			52,742			82,805			82,805
Capital lease obligations		10,470			10,470			12,322			12,322
Unamortized debt discount on 4.150 Percent Senior Notes		(2,293	)		(2,293	)		(2,407	)		(2,407	)
Unamortized debt discount on 2.000 Percent Senior Notes		(1,117	)		(1,117	)		(1,283	)		(1,283	)
Unamortized Senior Note Issuance Costs		(5,754	)		(5,754	)		(6,173	)		(6,173	)
Total debt		1,356,406			1,337,976			1,416,358			1,396,974
Short-term debt		(2,832	)		(2,832	)		-			-
Current portion of long-term debt (2)		(55,543	)		(55,543	)		(86,641	)		(86,641	)
Total long-term debt	$	1,298,031		$	1,279,601		$	1,329,717		$	1,310,333

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⁽¹⁾ The estimated fair value of the 2.000 Percent Senior Notes and the 4.150 Percent Senior Notes were based on a broker quotation (Level 2). Under fair value accounting guidance, Level 2 is based on 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.

⁽²⁾ Amounts due under the IS Obligation have been recorded at their present value and will be accreted to the ultimate settlement amount through the effective-interest method (Level 2).  We are required to make payments of €13 million due every July 1^st from 2017 through 2020.  Because the IS Obligation has an option, which if exercised requires us to make selected installment payments on demand, it has been included as Current portion of long-term debt.  Refer to Note 8-Goodwill and Intangible Assets, Net for more information.

At December 31, 2016, total debt maturing in each of the next five fiscal years and thereafter is as follows:

2017	$	57,362
2018		3,038
2019		2,084
2020		514,652
2021		1,472
Thereafter		768,532
Total	$	1,347,140

Our existing debt agreements contain provisions that limit our operating and financing activities. The 2015 Credit Agreement contains certain negative covenants that limit, among other things, our ability to permit certain of our subsidiaries to incur debt and the ability of us and our subsidiaries to incur liens, make fundamental changes (including selling all or substantially all of our assets), undertake transactions with affiliates and undertake sale and leaseback transactions. The 2.000 Percent Senior Notes Indenture and the 4.150 Percent Senior Notes Indenture contain covenants that, subject to certain exceptions, limit our ability to incur indebtedness secured by principal properties, enter into certain sale and leaseback transactions with respect to principal properties and enter into certain mergers, consolidations and transfers of all or substantially all of the assets of Harman. In addition, the 2015 Credit Agreement contains more restrictive financial covenants that require us to maintain compliance with specified financial ratios. We may have to curtail some of our operations to maintain compliance with the covenants in our existing debt agreements. A violation of any of these covenants could result in a default under our debt agreements, which could permit the lenders to accelerate the repayment of any borrowings outstanding and/or the holders of the notes to direct the trustee to accelerate repayment of amounts outstanding under the notes. A default or acceleration under our debt agreements would result in increased capital costs and could adversely affect our ability to operate our business and our results of operations and financial condition. As of December 31, 2016, we were in compliance with all of the covenants contained in the 2015 Credit Agreement, the 2.000 Percent Senior Notes Indenture and the 4.150 Percent Senior Notes Indenture.

Interest expense is reported net of interest income in our Condensed Consolidated Statements of Income. Interest expense, net was $9.2 million and $7.7 million for the three months ended December 31, 2016 and 2015, respectively. Gross interest expense was $10.1 million and $8.6 million for the three months ended December 31, 2016 and 2015, respectively. The non-cash portion of gross interest expense was $0.9 million and $0.7 million, respectively, for the three months ended December 31, 2016 and 2015. The cash portion of gross interest expense was $9.2 million and $7.9 million for the three months ended December 31, 2016 and 2015, respectively. Interest income was$0.9 million for the three months ended December 31, 2016 and 2015.

Interest expense, net was $18.5 million and $15.9 million for the six months ended December 31, 2016 and 2015, respectively. Gross interest expense was $20.3 million and $17.4 million for the six months ended December 31, 2016 and 2015, respectively. The non-cash portion of gross interest expense was $1.9 million and $1.4 million for the six months ended December 31, 2016 and 2015, respectively.  The cash portion of gross interest expense was $18.4 million and $16.0 million for the six months ended December 31, 2016 and 2015, respectively. Interest income was $1.8 million and $1.5 million for the six months ended December 31, 2016 and 2015, respectively.

Non-cash interest expense for the three and six months ended December 31, 2016 relates to the amortization of the debt discount and debt issuance costs on the 2.000 Percent Senior Notes and the 4.150 Percent Senior Notes, the amortization of debt issuance costs on the 2015 Credit Agreement, and the accretion of the IS Obligation.

Non-cash interest expense for the three and six months ended December 31, 2015 relates to the amortization of the debt discount and debt issuance costs on the 2.000 Percent Senior Notes and the 4.150 Percent Senior Notes, and the amortization of debt issuance costs on the 2015 Credit Agreement.

Cash interest expense for the three and six months ended December 31, 2016 and 2015 primarily relates to interest on the 2.000 Percent Senior Notes, the 4.150 Percent Senior Notes, the 2015 Credit Agreement, and our short-term borrowings.

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Interest income primarily relates to interest earned on our cash and cash equivalents and the variances from year to year are due to fluctuations in those balances and changes in interest rates.

Note 10 – Income Taxes

Our provision for income taxes is based on an estimated annual tax rate for the year applied to federal, state and foreign income. Income tax expense for the three months ended December 31, 2016 and 2015 was $60.9 million and $33.1 million, respectively. The effective tax rate for the three months ended December 31, 2016 and 2015 was 37.9 percent and 22.6 percent, respectively. The increase in the effective tax rate for the three months ended December 31, 2016 compared to the same period in the prior year was primarily due to a discrete tax charge of $22.7 million from deemed income on foreign earnings of which $3.7 million, $17.1 million and $1.9 million is attributable to fiscal years 2014, 2015 and 2016, respectively.

Income tax expense for the six months ended December 31, 2016 and 2015 was $98.3 million and $66.6 million, respectively. The effective tax rate for the six months ended December 31, 2016 and 2015 was 32.8 percent and 24.9 percent, respectively. The increase in the effective tax rate for the six months ended December 31, 2016 compared to the same period in the prior year was primarily due to a discrete tax charge of $22.7 million from deemed income on foreign earnings of which $3.7 million, $17.1 million and $1.9 million is attributable to fiscal years 2014, 2015 and 2016, respectively.

As of December 31, 2016 unrecognized tax benefits and the related interest were $65.6 million and $3.0 million, respectively, all of which would affect the tax rate if recognized. During the three months ended December 31, 2016, tax reserves decreased by $0.1 million primarily due to foreign currency translation that is recorded in the Condensed Consolidated Statements of Other Comprehensive Income. Related interest on prior year exposures was increased by $0.1 million. During the six months ended December 31, 2016, $0.3 million of tax reserves were established on new uncertain tax positions. Related interest on prior year exposures was increased by $0.2 million.

We periodically reevaluate the recognition and measurement threshold of our uncertain tax positions based on new or additional evidence such as tax authority administrative pronouncements, rulings and court decisions. The ultimate settlement however, may be materially different from the amount accrued. Our significant jurisdictions that are under examination are Germany, Austria and the U.S. The examination by the German revenue authorities for fiscal years 2005 through 2010 is closed, with the exception of one remaining issue that will proceed to the fiscal authority and court. The German revenue authorities commenced their examination for fiscal years 2011 to 2014 during the second quarter of fiscal year 2017. Additionally, the Austrian revenue authorities commenced their examination for fiscal years 2011 to 2014 during the second quarter of fiscal year 2017. The tax years currently under examination by the United States Internal Revenue Service (“IRS”) are fiscal years 2014 and 2015 for Harman. We do not expect these examinations to be closed for at least the next 12 months. Fiscal years 2006 to 2008 (and 2012 to 2013 for any rollforward adjustments) for Harman and fiscal years 2010 to 2012 for Harman Connected Services Holding Corp. (fka Symphony Teleca Corporation) are currently in the IRS Appeals process and are awaiting resolution. 

Although the final resolution of the examinations and appeals is uncertain, we believe that the ultimate disposition will not have a material adverse effect on our Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Income or our Condensed Consolidated Statements of Cash Flow. While we expect the amount of unrecognized tax benefits to change, we are unable to quantify the change at this time.  

Note 11 – Shareholders’ Equity

Preferred Stock

As of December 31, 2016 and June 30, 2016, we had no shares of preferred stock outstanding. We are authorized to issue 5 million shares of preferred stock, $0.01 par value.

Common Stock

We have 200 million authorized shares of common stock, $0.01 par value. At December 31, 2016 and June 30, 2016, we had 101,678,761 and 101,157,320 shares issued; 31,805,035 and 31,112,246 shares in treasury stock; and 69,873,726 and 70,045,074 shares outstanding (net of treasury stock), respectively.

Share Buyback Program

On October 28, 2014, our Board of Directors authorized the repurchase of up to $500.0 million of our common stock over a three year period (the “2014 Buyback Program”). The 2014 Buyback Program allows us to purchase shares of our common stock in accordance with applicable securities laws on the open market or through privately negotiated transactions during the authorized three year period. On November 14, 2016, Harman entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Samsung Electronics Co., Ltd., a Korean corporation (“Samsung”), Samsung Electronics America, Inc., a New York corporation and wholly owned

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subsidiary of Samsung, and Silk Delaware, Inc., a Delaware corporation and wholly owned subsidiary of Samsung USA (“Merger Sub”), pursuant to which Merger Sub will be merged with and into Harman  (the “Merger”), with Harman continuing as the surviving corporation and an indirect wholly owned subsidiary of Samsung.  Pursuant to the Merger Agreement, the 2014 Buyback Program has been suspended. In the event that the 2014 Buyback Program resumes, we will determine the timing and the amount of any repurchases based on an evaluation of market conditions, share price, other growth opportunities and other factors. We have and may, if the 2014 Buyback Program resumes, repurchase shares on the open market or, from time to time, through repurchase plans with one or more external brokers that provide a structure for execution of share repurchases under the 2014 Buyback Program. During the three months ended December 31, 2016 and 2015, we repurchased 241,357shares at a cost of $20.0 million and 123,850 shares at a cost of $12.9 million, respectively. During the six months ended December 31, 2016 and 2015 we repurchased 692,789shares at a cost of $55.2 million and 494,550 shares at a cost of $50.0 million, respectively, for a total cumulative buyback of 2,324,537shares at a cost of $195.2 million under the 2014 Buyback Program.

Changes in Equity:

The following is a summary of the changes in Accumulated Other Comprehensive Income (“AOCI”) and changes in equity for the six months ended December 31, 2016 and 2015:

($ in thousands, except per share data)	Preferred Stock		Common Stock		Additional Paid-in Capital			AOCI			Retained Earnings			Treasury Stock			Total Equity
Balance, June 30, 2016	$	-	$	1,012	$	1,410,765		$	(77,241	)	$	2,490,570		$	(1,372,633	)	$	2,452,473
Net income		-		-		-			-			202,566			-			202,566
Other comprehensive    income, net of tax		-		-					(23,689	)		-			-			(23,689	)
Exercise of stock options		-		5		7,484			-			-			-			7,489
Repurchases related to share-    based compensation    arrangements		-		-		(14,930	)		-			-			-			(14,930	)
Share-based compensation, net		-		-		30,058			-			-			-			30,058
Excess tax benefit from share-    based compensation		-		-		27,309			-			-			-			27,309
Treasury stock repurchases		-		-		-			-			-			(55,168	)		(55,168	)
Dividends ($0.35 per share)		-		-		-			-			(49,649	)		-			(49,649	)
Balance, December 31, 2016	$	-	$	1,017	$	1,460,686		$	(100,930	)	$	2,643,487		$	(1,427,801	)	$	2,576,459

($ in thousands, except per share data)	Preferred Stock		Common Stock		Additional Paid-in Capital			AOCI			Retained Earnings			Treasury Stock			Total Harman International Industries, Incorporated Shareholders’ Equity			Non Controlling Interest			Total Equity
Balance, June 30, 2015	$	-	$	1,007	$	1,365,257		$	11,434		$	2,229,517		$	(1,232,602	)	$	2,374,613		$	18,213		$	2,392,826
Net income		-		-		-			-			199,996			-			199,996			707			200,703
Other comprehensive    income, net of tax		-		-		-			(45,245	)		-			-			(45,245	)		-			(45,245	)
Exercise of stock options		-		4		5,527			-			-			-			5,531			-			5,531
Repurchases related to    share-based compensation    arrangements		-		-		(11,861	)		-			-			-			(11,861	)		-			(11,861	)
Share-based    compensation, net		-		-		20,941			-			-			-			20,941			-			20,941
Excess tax benefit from    share-based compensation		-		-		1,958			-			-			-			1,958			-			1,958
Treasury stock repurchases		-		-		-			-			-			(50,009	)		(50,009	)		-			(50,009	)
Dividends ($0.35 per share)		-		-		-			-			(50,382	)		-			(50,382	)		-			(50,382	)
Non-controlling interest		-		-		-			-			-			-			-			(4	)		(4	)
Balance, December 31, 2015	$	-	$	1,011	$	1,381,822		$	(33,811	)	$	2,379,131		$	(1,282,611	)	$	2,445,542		$	18,916		$	2,464,458

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Note 12 – Share-Based Compensation

On December 7, 2011 (the “Effective Date”), our shareholders approved the 2012 Stock Option and Incentive Plan (the “2012 Plan”), which is effective through December 7, 2021. As of the Effective Date, no further grants may be granted under our former plan, the Amended and Restated 2002 Stock Option and Incentive Plan, as amended (the “2002 Plan” and together with the 2012 Plan, the “Plans”). On December 4, 2013, we amended the 2012 Plan to (i) increase the number of shares available under the 2012 Plan for the grant of future awards by 2,869,821 shares to an aggregate amount not to exceed 7,269,821 shares of our common stock and (ii) modified certain share counting provisions related to the definition of a full-value grant from 1.71 to 1.5 (“Full-Value Grant”). On December 9, 2015, we further amended the 2012 Plan to increase the number of shares available under the 2012 Plan for the grant of future awards by 2,000,000 shares to an aggregate amount not to exceed 9,269,821 shares of our common stock. The 2012 Plan provides for two types of awards: (i) a Full-Value Grant under which one award shall reduce the shares available for grant under the 2012 Plan by 1.71 shares if granted prior to December 4, 2013 or 1.5 shares if granted on or after December 4, 2013, and (ii) an option or stock appreciation right grant, under which one award shall reduce the shares available for grant under the 2012 Plan by one share. Shares may be issued as original issuances, treasury shares or a combination of both. Option awards are granted with an exercise price equal to the market price of our common 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. During the six months ended December 31, 2016, 940,301 stock-settled restricted stock units, 6,136 cash-settled restricted stock units and 1,853 cash-settled stock appreciation rights were granted under the 2012 Plan. As of December 31, 2016, there were 3,844,426 shares available for grant under the 2012 Plan.

Share-based compensation expense, net was $19.9 million and $12.5 million for the three months ended December 31, 2016 and 2015, respectively, and was $30.1 million and $20.9 million for the six months ended December 31, 2016 and 2015, respectively. The total income tax benefit recognized in the Condensed Consolidated Statements of Income for share-based compensation arrangements was $5.3 million and $3.4 million for the three months ended December 31, 2016 and 2015, respectively, and was $7.6 million and $5.4 million for the six months ended December 31, 2016 and 2015, respectively.

Fair Value Determination

Stock Options

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model. There were no options granted during the six months ended December 31, 2016 and 2015.

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 the Plans as of December 31, 2016 and changes during the six months ended December 31, 2016 is presented below:

	Shares			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at June 30, 2016		667,579		$	73.30		4.57	$	8,044
Granted		-			-
Exercised		(164,636	)		56.30
Forfeited or expired		(43,220	)		112.24
Outstanding at December 31, 2016		459,723		$	75.73		3.70	$	17,373
Exercisable at December 31, 2016		458,166		$	75.56		3.69	$	17,371

The total intrinsic value of options exercised for the three months ended December 31, 2016 and 2015 was $6.0 million and $2.9 million, respectively, and was $7.1 million and $5.3 million for the six months ended December 31, 2016 and 2015, respectively.

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Modification of Certain Stock Option Awards

Prior to fiscal year 2011, certain of the award agreements under the 2002 Plan stated that vested options not exercised were forfeited upon termination of employment for any reason other than death or disability. However, such award agreements provided that the Compensation and Option Committee of our Board of Directors (the “Compensation and Option Committee”) could extend the time period to exercise vested options 90 days beyond the employment termination date for certain employees. During the three and six months ended December 31, 2016 and 2015, the Compensation and Option Committee used this authority. This action represented a modification of the terms or conditions of an equity award and therefore was accounted for as an exchange of the original award for a new award. Incremental share-based compensation cost for the excess of the fair value of the new award over the fair value of the original award was immaterial.

Restricted Stock Units

In the six months ended December 31, 2016, we granted 210,476 restricted stock units with earnings per share (“EPS”) performance conditions, and 210,476 restricted stock units with market conditions under the 2012 Plan. Additionally, both the restricted stock units with EPS performance conditions and the restricted stock units with market conditions secondarily vest based on the achievement of a return on invested capital (“ROIC”) performance condition, specifically, the achievement of a certain average ROIC level over fiscal years 2017 through 2019. The restricted stock units with EPS performance conditions cliff vest three years from the date of grant based on the achievement of certain cumulative EPS levels from fiscal years 2017 through 2019. The restricted stock units with market conditions cliff vest three years from the date of grant based on a comparison of our total shareholder return (“TSR”) to the TSR of a selected peer group of publicly listed multinational companies. The grant date fair value of the restricted stock units with market conditions of $11.4 million was calculated using a Monte Carlo simulation model. Compensation expense is recognized ratably over the three-year vesting period based on the grant date fair value and our assessment of the probability that the applicable targets will be met for the performance conditions, which is reassessed each reporting period.

In the six months ended December 31, 2015, we granted 175,353 restricted stock units with EPS performance conditions and 175,353 restricted stock units with market conditions under the 2012 Plan. Additionally, both the restricted stock units with EPS performance conditions and the restricted stock units with market conditions secondarily vest based on the achievement of a ROIC performance condition, specifically, the achievement of a certain average ROIC level over fiscal years 2016 through 2018. The restricted stock units with EPS performance conditions cliff vest three years from the date of grant based on the achievement of certain cumulative EPS levels from fiscal years 2016 through 2018. The restricted stock units with market conditions cliff vest three years from the date of grant based on a comparison of our TSR to the TSR of a selected peer group of publicly listed multinational companies. The grant date fair value of the restricted stock units with market conditions of $12.3 million was calculated using a Monte Carlo simulation model. Compensation expense is recognized ratably over the three-year vesting period based on the grant date fair value and our assessment of the probability that the applicable targets will be met for the performance conditions, which is reassessed each reporting period.

In the fiscal year ended June 30, 2014, we granted 130,616 restricted stock units with EPS performance conditions and 130,641 restricted stock units with market conditions under the 2012 Plan. These restricted stock units cliff-vested in September 2016. Compensation expense, for both the restricted stock units with performance conditions and the restricted stock units with market conditions, was recognized ratably over the three-year vesting period based on the grant date fair value and our assessment of the probability that the applicable targets would be met, for awards with performance conditions. Of the restricted stock units with EPS performance conditions, 100 percent vested and of the restricted stock units with market conditions 78 percent vested based on the actual attainment of certain targets.

In the six months ended December 31, 2016 and 2015, we also granted 6,830 and 5,243 time-vested restricted stock units, respectively, without performance or market conditions, that cliff-vest three years from the date of grant, 501,440 and 363,788 time-vested restricted stock units, respectively, without performance or market conditions that vest ratably over the three-year vesting period, and 11,079 and 14,424 time-vested restricted stock units, respectively, without performance or market conditions, that cliff-vest one year from the date of grant, under the 2012 Plan.

In the six months ended December 31, 2016 and 2015, we granted 6,136 and 4,923 cash-settled restricted stock units, respectively, under the 2012 Plan. These restricted stock units are accounted for as liability awards and are recorded at the fair value at the end of the reporting period in accordance with their vesting schedules. During the six months ended December 31, 2016 and 2015, 2,268 and 869 cash-settled restricted stock units were settled, respectively. At December 31, 2016, 10,260 cash-settled restricted stock units were outstanding.

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A summary of equity classified restricted stock unit activity as of December 31, 2016 and changes during the six months ended December 31, 2016 is presented below:

	Restricted Stock Units
Nonvested at June 30, 2016		1,494,947
Granted		940,301
Vested		(528,674	)
Forfeited		(125,880	)
Non-vested at December 31, 2016		1,780,694

At December 31, 2016, the aggregate intrinsic value of equity-classified restricted stock units was $197.9 million and there was $97.6 million of total unrecognized compensation cost related to equity classified restricted stock unit compensation arrangements. The weighted average recognition period was 2.0 years.

Stock Appreciation Rights

A summary of cash-settled stock appreciation rights as of December 31, 2016 and changes during the six months ended December 31, 2016 is presented below:

	Stock Appreciation Rights
Non-vested at June 30, 2016		4,342
Granted		1,853
Vested		(2,707	)
Forfeited		0
Non-vested at December 31, 2016		3,488
Exercisable		2,310

These stock appreciation rights are accounted for as liability awards and are recorded at the fair value at the end of the reporting period in accordance with their vesting schedules. The fair value of each stock appreciation right award is estimated on the date of grant using the Black-Scholes option valuation model, which uses the assumptions noted below.

	Six Months Ended December 31, 2016		Six Months Ended December 31, 2015
Expected volatility	36.8-38.8%		35.4-39.0%
Weighted-average volatility		38.1%		37.5%
Expected annual dividend	$ 1.40		$ 1.40
Expected term (in years)	3.44-5.44		2.56-4.56
Risk-free rate	0.9-1.3%		1.1-1.6%

Note 13 – Derivatives

We are exposed to market risk from changes in foreign currency exchange rates and interest rates, which could affect our operating results, financial condition and cash flows. We manage our exposure to these risks through our regular operating and financial activities and, when appropriate, through the use of derivative financial instruments. These derivative instruments are utilized to hedge economic exposures, as well as to reduce volatility in earnings and cash flows resulting from shifts in market rates. We enter into limited types of derivative contracts including foreign currency spot and forward, as well as interest rate swap contracts, to manage foreign currency and interest rate exposures. Our primary foreign currency exposure is the Euro. The fair market values of all our derivative contracts change with fluctuations in interest rates and currency rates and are designed so that any changes in their values are offset by changes in the values of the underlying exposures. Derivative financial instruments are held solely as risk management tools and not for trading or speculative purposes.

We record all derivative instruments as either assets or liabilities at fair value in our Condensed Consolidated Balance Sheets. Certain of these derivative contracts have been designated as cash flow hedges, whereby gains and losses are reported within AOCI in our Condensed Consolidated Balance Sheets, until the underlying transaction occurs, at which point they are reported in earnings as gains

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and losses in our Condensed Consolidated Statements of Income. Certain of our derivatives, for which hedge accounting is not applied, are effective as economic hedges. These derivative contracts are required to be recognized each period at fair value, with gains and losses reported in earnings in our Condensed Consolidated Statements of Income and therefore do result in some level of earnings volatility. The level of volatility will vary with the type and amount of derivative hedges outstanding, as well as fluctuations in the currency and interest rate markets during the period. The related cash flow impacts of all our derivative activities are reflected as cash flows from operating activities.

Derivatives, by their nature, involve varying degrees of market and credit risk. The market risk associated with these instruments resulting from currency exchange and interest rate movements is expected to offset the market risk of the underlying transactions, assets and liabilities being hedged. We do not believe there is significant risk of loss in the event of non-performance by the counterparties associated with these instruments, because these transactions are executed with a diversified group of major financial institutions. Furthermore, our policy is to contract only with counterparties having a minimum investment grade or better credit rating. Credit risk is managed through the continuous monitoring of exposure to such counterparties.

Foreign Exchange Risk Management

We use foreign exchange contracts to hedge the price risk associated with foreign denominated forecasted purchases of materials used in our manufacturing process and to manage currency risk associated with operating costs in certain operating units, including foreign currency denominated intercompany loans and other foreign currency denominated assets. These contracts generally mature over the nextthree years. The majority of these contracts are designated as cash flow hedges.

At December 31, 2016 and June 30, 2016, we had outstanding foreign exchange contracts, primarily forward contracts, which are summarized below:

	December 31, 2016					June 30, 2016
	Gross Notional Value		Fair Value Asset/ (Liability)(1)			Gross Notional Value		Fair Value Asset/ (Liability)(1)
Currency Hedged (Buy/Sell):
U.S. Dollar/Euro	$	1,099,086	$	157,961		$	1,516,094	$	149,901
Indian Rupee/U.S. Dollar		260,200		7,068			251,355		(721	)
U.S. Dollar/Chinese Yuan		158,071		961			-		-
Euro/U.S. Dollar		140,579		(8,424	)		224,921		(6,280	)
Chinese Yuan/U.S. Dollar		25,486		(954	)		-		-
Mexican Peso/U.S. Dollar		16,519		(271	)		-		-
GBP/Euro		8,939		(95	)		-		-
Euro/Russian Rubles		8,125		(526	)		3,601		(667	)
U.S. Dollar/Russian Rubles		4,712		(590	)		9,517		(478	)
U.S. Dollar/Brazilian Real		3,863		(652	)		20,958		(2,459	)
U.S. Dollar/Australian Dollar		-		-			745		(37	)
Total	$	1,725,580	$	154,478		$	2,027,191	$	139,259

⁽¹⁾ Represents the net receivable included in our Condensed Consolidated Balance Sheets within Other current assets, Other assets, Accrued liabilities and Other non-current liabilities, as applicable.

Cash Flow Hedges

We designate a portion of our foreign exchange contracts as cash flow hedges of foreign currency denominated purchases and cash flow hedges of foreign currency denominated intercompany loans. As of December 31, 2016 and June 30, 2016, we had $1.448 billion and $1.608 billion of forward contracts maturing through May 2022. These contracts are recorded at fair value in the accompanying Condensed Consolidated Balance Sheets. The changes in fair value for these contracts are calculated on a forward-to-forward rate basis. These changes in fair value are reported in AOCI and are reclassified to either Cost of sales, Foreign exchange losses (gains), net, or Selling, general and administrative expenses (“SG&A”), depending on the nature of the underlying asset or liability that is being hedged, in our Condensed Consolidated Statements of Income, in the period or periods during which the underlying transaction occurs.  

Changes in the fair value of the derivatives are highly effective in offsetting changes in the cash flows of the hedged items because the amounts and the maturities of the derivatives approximate those of the forecasted exposures. Any ineffective portion of the derivative is recognized in the current period in our Condensed Consolidated Statements of Income, in the same line item in which the foreign

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currency gain or loss on the underlying hedged transaction was recorded. We recognized $0.1 million of ineffectiveness in our Condensed Consolidated Statement of Income in the three months ended December 31, 2016 and 2015 and $(0.1) million and $0.1 million in the six months ended December 31, 2016 and 2015, respectively. At December 31, 2016 and June 30, 2016, the fair values of these contracts were net assets of $141.7 million and $131.9 million, respectively. The amount associated with these hedges that is expected to be reclassified from AOCI to earnings within the next 12 months is a gain of $110.2 million.

Economic Hedges

When hedge accounting is not applied to derivative contracts, or after former cash flow hedges have been de-designated as balance sheet hedges, we recognize the gain or loss on the associated contracts directly in current period earnings in our Condensed Consolidated Statements of Income as either Foreign exchange losses (gains), net, Cost of sales, or SG&A according to the underlying exposure. As of December 31, 2016 and June 30, 2016, we had $277.5 million and $419.1 million, respectively, of forward contracts maturing through October 2018 in various currencies to hedge foreign currency denominated intercompany loans and other foreign currency denominated assets. At December 31, 2016 and June 30, 2016, the fair values of these contracts were net assets of $12.8 million and $7.4 million, respectively. Adjustments to the carrying value of the foreign currency forward contracts offset the gains and losses on the underlying loans in Foreign exchange losses (gains), net in our Condensed Consolidated Statements of Income.

Interest Rate Risk Management

Interest Rate Lock

In May 2015, we entered into an interest rate lock on the 2.000 Percent Senior Notes. The interest rate lock was used to protect the interest rate on the 2.000 Percent Senior Notes between the time the lock was initiated and the time the 2.000 Percent Senior Notes were issued, therefore eliminating any interest rate risk leading up to the bond issuance. We recognized $0.1 million in AOCI which is being amortized into Interest expense, net in our Condensed Consolidated Statements of Income over the term of the 2.000 Percent Senior Notes.

The following tables provide a summary of the fair value amounts of our derivative instruments as of December 31, 2016 and June 30, 2016:

		Fair Value
Derivatives Designated as Cash Flow Hedges, Gross:	Balance Sheet Location	December 31, 2016		June 30, 2016
Other assets:
Foreign exchange contracts	Other current assets	$	93,467	$	69,122
Foreign exchange contracts	Other assets		52,375		67,232
Total assets			145,842		136,354
Other liabilities:
Foreign exchange contracts	Accrued liabilities	$	1,887	$	3,482
Foreign exchange contracts	Other non-current liabilities		2,232		993
Total liabilities			4,119		4,475
Net asset for derivatives designated as    hedging instruments		$	141,723	$	131,879
Derivatives Designated as Economic Hedges, Gross:
Other assets:
Foreign exchange contracts	Other current assets	$	21,217	$	14,761
Foreign exchange contracts	Other assets		251		345
Total assets			21,468		15,106
Other liabilities:
Foreign exchange contracts	Accrued liabilities	$	8,187	$	5,763
Foreign exchange contracts	Other non-current liabilities		526		1,963
Total liabilities			8,713		7,726
Net asset for economic hedges		$	12,755	$	7,380
Total net derivative asset		$	154,478	$	139,259

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Derivative Activity:

The following tables summarize the activity of our derivative instruments designated as cash flow hedges for the three months ended December 31, 2016 and 2015:

Derivative	Location of Derivative Gain/(Loss) Recognized in Income	Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)						Gain/(Loss) Recognized in Income on Derivatives (Ineffective Portion)						Gain/(Loss) from Amounts Excluded from Effectiveness Testing
		Three Months Ended December 31,
		2016			2015			2016			2015			2016		2015
Foreign exchange contracts	Cost of sales	$	22,065		$	21,042		$	(94	)	$	(88	)	$	-	$	-
Foreign exchange contracts	SG&A		(93	)		24			-			-			-		-
Foreign exchange contracts	Foreign exchange losses (gains), net		(3,953	)		-			-			-			-		(3	)
Interest rate lock	Interest expense, net		(6	)		(5	)		-			-			-		-
Total cash flow hedges		$	18,013		$	21,061		$	(94	)	$	(88	)	$	-	$	(3	)

Derivative	Gain/(Loss) Recognized in AOCI (Effective Portion)
	Three Months Ended December 31,
	2016		2015
Foreign exchange contracts	$	55,613	$	41,467

The following tables summarize the activity of our derivative instruments designated as cash flow hedges for the six months ended December 31, 2016 and 2015:

Derivative	Location of Derivative Gain/(Loss) Recognized in Income	Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)						Gain/(Loss) Recognized in Income on Derivatives (Ineffective Portion)					Gain/(Loss) from Amounts Excluded from Effectiveness Testing
		Six Months Ended December 31,
		2016			2015			2016		2015			2016		2015
Foreign exchange contracts	Cost of sales	$	42,158		$	43,299		$	111	$	(116	)	$		$	-
Foreign exchange contracts	SG&A		(80	)		24			-		-			-		-
Foreign exchange contracts	Foreign exchange losses (gains), net		(3,335	)		-			-		-			-		(1	)
Interest rate lock	Interest expense, net		(11	)		(10	)		-		-			-		-
Total cash flow hedges		$	38,732		$	43,313		$	111	$	(116	)	$	-	$	(1	)

Derivative	Gain/(Loss) Recognized in AOCI (Effective Portion)
	Six months ended December 31,
	2016		2015
Foreign exchange contracts	$	53,944	$	51,448

The following table summarizes gains and losses from our derivative instruments that are not designated as hedging instruments for the three and six months ended December 31, 2016 and 2015:

	Location of Derivative Gain/(Loss)	Three Months Ended December 31,					Six Months Ended December 31,
Derivative	Recognized in Income	2016			2015		2016			2015
Foreign exchange contracts	Cost of sales	$	8,686		$	3,605	$	7,375		$	4,489
Foreign exchange contracts	Foreign exchange losses (gains), net		(5,266	)		2,963		(4,948	)		(3,479	)
Foreign exchange contracts	SG&A		(24	)		-		(26	)		-

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Note 14 – Fair Value Measurements

Pursuant to the accounting guidance for fair value measurements, fair value is defined as the price we would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date. When determining the fair value measurements for assets and liabilities, we consider the principal or most advantageous market in which the asset or liability would transact in and we consider assumptions that market participants would use when pricing the asset or liability.

Fair Value Hierarchy

Under fair value accounting guidance, there is a three-tier fair value hierarchy to prioritize the inputs used in measuring fair value. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions.

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 that reflect the entity’s own assumptions in measuring the asset or liability at fair value.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

For assets and liabilities measured at fair value on a recurring basis, fair value is the price we would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date. In the absence of active markets for the identical assets and liabilities, such measurements involve developing assumptions based on market observable data, and in the absence of such data, internal information that is consistent with what market participants would use in a hypothetical transaction that occurs at the measurement date.

The following table provides the fair value hierarchy for assets and liabilities measured on a recurring basis.

	Fair Value at December 31, 2016							Fair Value at June 30, 2016
Description	Level 1		Level 2		Level 3			Level 1		Level 2		Level 3
Assets/(Liabilities)
Available-for-sale securities	$	55,907	$	-	$	15,000		$	54,447	$	-	$	-
Foreign exchange contracts		-		154,478		-			-		139,259		-
Pension assets		2,927		-		-			3,090		-		-
Contingent consideration		-		-		(63,806	)		-		-		(50,727	)
Net asset/(liability)	$	58,834	$	154,478	$	(48,806	)	$	57,537	$	139,259	$	(50,727	)

	Total Gains (Losses) for the Three Months Ended December 31,						Total Gains (Losses) for the Six months ended December 31,
Description of Liability	2016			2015			2016			2015
Contingent Consideration	$	(3,746	)	$	(457	)	$	(15,332	)	$	(914	)

The following describes the valuation methodologies we use to measure assets and liabilities accounted for at fair value on a recurring basis:

Available-for-Sale Securities: Available-for-sale securities are classified as Level 1 when the fair value is determined from market quotes obtained from financial institutions in active markets. Available-for-sale securities are classified as Level 3 when relevant observable inputs for a security are not available.

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In August 2016, we purchased a convertible debt security issued by a nonpublic entity for $15.0 million and classified the security as available-for-sale.  This available-for-sale debt security is measured at fair value each reporting period, with unrealized gains and losses recorded in other comprehensive income. We measure its fair value using an income approach that incorporates probability-weighted outcomes.  We classified this investment as Level 3 due to the lack of observable market data over fair value inputs such as the fair value of the nonmarketable equity shares underlying the conversion option. Changes in the estimated fair value of the nonmarketable equity shares underlying the conversion option contribute to changes in the fair value of the available-for-sale debt security.  Additionally, updated estimates of the assessed likelihood of a default by the issuer contribute to changes in the fair value of the available-for-sale debt security. As of December 31, 2016, the fair value of this available-for-sale debt security was $15.0 million.The contractual maturity date is August 18, 2018.

Foreign Exchange Contracts: We use foreign exchange contracts to hedge market risks relating to possible adverse changes in foreign currency exchange rates. Our foreign exchange contracts were measured at fair value using Level 2 inputs. Such inputs include foreign currency exchange spot and forward rates for similar transactions in actively quoted markets.

Pension Assets: Our pension assets have been valued using Level 1 inputs as quoted prices in an active market exist for these assets. Refer to Note 17—Retirement Benefits for more information.

Contingent Consideration: At December 31, 2016, a portion of our contingent consideration is associated with an earn-out related to the acquisition of TowerSec. We use a Monte Carlo simulation model (a form of the income approach) in determining the fair value of the contingent consideration. The principal inputs to the approach include our expectations of the achievement of certain targets for awarded business through March 10, 2019, risk-free rates, volatility, credit spreads, and the weighted average cost of capital.  At June 30, 2016, our estimate of the fair value of this contingent consideration liability was $27.7 million.  During the three and six months ended December 31, 2016, we reconfirmed our estimate of the fair value of this contingent consideration liability.

A portion of our contingent consideration is associated with a $30.0 million earn-out related to the acquisition of Redbend Ltd (“Redbend”). We use a discounted cash flow approach (a form of the income approach) in determining the fair value of the contingent consideration. The principal inputs to the approach include our expectations of the achievement of Redbend’s cumulative bookings target for awarded business from January 1, 2015 through December 31, 2016 and a discount rate that begins with our weighted average cost of capital and adjusts for the risks associated with the underlying cumulative bookings target for awarded business outcome, the functional form of the payout and our credit risk associated with making the payment. At June 30, 2016, our estimate of the fair value of this contingent consideration liability was $18.4 million.  During the three months ended September 30, 2016, we revised our estimate of the fair value of this contingent consideration liability to $30.0 million. During the three months ended December 31, 2016, we reconfirmed our estimate of the fair value of this contingent consideration liability.

A portion of our contingent consideration is associated with a $10.0 million earn-out related to the acquisition of Southern Vision Systems, Inc. (“SVSI”). We use a discounted cash flow approach (a form of the income approach) in determining the fair value of the contingent consideration. The principal input to the approach is our expectation of the achievement of SVSI’s contribution margin targets related to the sale of certain products through June 30, 2018. At June 30, 2016, our estimate of the fair value of this contingent consideration liability was $3.0 million.  During the three months ended September 30, 2016, we made a payment of approximately $2.1 million related to fiscal year 2016 results.  During the three and six months ended December 31, 2016, we revised our estimate of the fair value of this contingent consideration liability to $4.7 million

A portion of our contingent consideration is associated with an earn-out related to our acquisition of Duran Audio BV (“Duran”). We use a probability-weighted discounted cash flow approach (a form of the income approach) in determining the fair value of the contingent consideration. The principal inputs to the approach include our expectations of Duran’s gross profit related to the sale of certain specified products through June 30, 2020 and a discount rate that begins with our weighted average cost of capital and adjusts for the risks associated with the underlying Duran gross profit outcome, the functional form of the payout and our credit risk associated with making the payment.  At June 30, 2016, our estimate of the fair value of this contingent consideration liability was $1.6 million.  During the three months ended September 30, 2016, we made a payment of approximately $0.1 million related to fiscal year 2016 results.  During the three and six months ended December 31, 2016, we reconfirmed our $1.5 million estimate of the fair value of this contingent consideration liability.

A portion of our contingent consideration is associated with an earn-out related to the acquisition of I.P.S.G International Product Solution Group Pty Ltd. and VFX Systems Pty Ltd. (collectively “IPSG/VFX”). We determined the fair value of the contingent consideration based on our expectations of IPSG/VFX’s gross profit related to the sale of certain specified products through June 30, 2017.  At June 30, 2016, our estimate of the fair value of this contingent consideration liability was $0.  During the three and six months ended December 31, 2016, we reconfirmed our estimate of the fair value of this contingent consideration liability.

Given the use of significant inputs that are not observable in the market, our contingent consideration is classified within Level 3 of the fair value hierarchy. Refer to Note 22—Acquisitions for more information.

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Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

Certain assets are measured at fair value on a non-recurring basis. These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. These assets can include long-lived assets that have been reduced to fair value when they are held for sale or impaired, goodwill that has been reduced to fair value when it is impaired, cost and equity method investments and the remeasurement of retained investments in formerly consolidated subsidiaries upon a change in control that results in deconsolidation of a subsidiary if we sell a controlling interest and retain a noncontrolling stake in the entity. Assets that are written down to fair value when impaired and retained investments are not subsequently adjusted to fair value unless further impairment occurs.

The following table provides the carrying value for assets and liabilities measured on a non-recurring basis, all of which are measured under Level 3 of the fair value hierarchy, and the losses recorded during the periods presented. There were no gains or losses recognized in the three and six months ended December 31, 2016 and 2015.

Description of Assets	December 31, 2016		June 30,2016
Equity method investments	$	1,950	$	1,175
Goodwill		1,500,499		1,510,279
Long-lived assets		1,014,969		1,069,574
Total	$	2,517,418	$	2,581,028

The following describes the valuation methodologies we use to measure financial and non-financial instruments accounted for at fair value on a non-recurring basis.

Equity Method Investments: Equity method investments are generally valued using a discounted cash flow model, comparative market multiples or a combination of both approaches as appropriate. These investments are generally included in Level 3.

Goodwill: Goodwill is evaluated for impairment annually or more frequently if an event or circumstance indicates that an impairment loss may have been incurred. This asset is included in Level 3. Refer to Note 8—Goodwill and Intangible Assets, Net for more information.

Long-lived Assets: Long-lived assets include Property, plant and equipment, net and intangible assets, and are valued using the best information available, including quoted market prices or market prices for similar assets when available or internal cash flow estimates discounted at an appropriate interest rate or independent appraisals, as appropriate. For real estate, cash flow estimates are based on current market estimates that reflect current and projected lease profiles and available industry information about expected trends in rental, occupancy and capitalization rates. These assets are generally included in Level 3.

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Note 15 – Other Comprehensive Income (Loss)

Other comprehensive income (loss) is comprised of the following:

	Three Months Ended December 31, 2016						Three Months Ended December 31, 2015						Six Months Ended December 31, 2016						Six Months Ended December 31, 2015
	Pre-Tax			Net of Tax			Pre-Tax			Net of Tax			Pre-Tax			Net of Tax			Pre-Tax			Netof Tax
Foreign currency translation    losses	$	(46,751	)	$	(46,751	)	$	(19,924	)	$	(19,924	)	$	(43,360	)	$	(43,360	)	$	(53,247	)	$	(53,247	)
Changes in hedging derivatives:
Reclassifications from AOCI into    income (effective portion)(1)		(22,065	)		(19,285	)		(21,042	)		(16,737	)		(42,158	)		(41,528	)		(43,299	)		(35,656	)
Reclassifications from AOCI into    income (effective portion)(2)		93			81			(24	)		(19	)		80			79			(24	)		(20	)
Reclassifications from AOCI into    income (effective portion)(3)		6			5			5			4			11			9			10			8
Reclassifications from AOCI into    income (effective portion)(6)		3,953			3,455			-			-			3,335			3,285			-			-
Gains recognized in AOCI (effective portion)		55,613			48,606			41,467			32,984			53,944			53,138			51,448			42,367
Other gains		669			585			87			69			675			665			23			19
Change in hedging derivatives		38,269			33,447			20,493			16,301			15,887			15,648			8,158			6,718
Pension liability adjustment:
Amortization of prior service cost(4)		214			152			247			166			428			301			494			347
Amortization of net loss(4)		1,029			732			1,309			878			2,081			1,464			2,624			1,842
Expected return on plan assets(4)		(27	)		(19	)		(31	)		(21	)		(55	)		(39	)		(62	)		(44	)
Other gains (losses) (5)		3,013			2,145			1,483			995			2,480			1,749			(1,154	)		(810	)
Pension liability adjustment		4,229			3,010			3,008			2,018			4,934			3,475			1,902			1,335
Unrealized (losses) gains on    available-for-sale securities		(735	)		(468	)		53			34			857			548			(81	)		(51	)
Other comprehensive (loss) income		(4,988	)		(10,762	)		3,630			(1,571	)		(21,682	)		(23,689	)		(43,268	)		(45,245	)
Other comprehensive (loss) income    attributable to Harman International    Industries, Incorporated	$	(4,988	)	$	(10,762	)	$	3,630		$	(1,571	)	$	(21,682	)	$	(23,689	)	$	(43,268	)	$	(45,245	)

⁽¹⁾ Reclassified to Cost of sales in our Condensed Consolidated Statements of Income. Refer to Note 13 – Derivatives for more information.

⁽²⁾ Reclassified to SG&A in our Condensed Consolidated Statements of Income. Refer to Note 13 – Derivatives for more information.

⁽³⁾ Reclassified to Interest expense, net in our Condensed Consolidated Statements of Income. Refer to Note 13 – Derivatives for more information.

⁽⁴⁾ Reclassified to SG&A in our Condensed Consolidated Statements of Income. Refer to Note 17 – Retirement Benefits for more information.

⁽⁵⁾ Primarily represents currency impact on cumulative amount of benefit plan net actuarial losses and prior service credits included in AOCI.

⁽⁶⁾ Reclassified to Foreign exchange losses (gains), net in our Condensed Consolidated Statements of Income. Refer to Note 13–Derivatives for more information.

AOCI: At December 31, 2016 and June 30, 2016 AOCI consisted of the following:

Income/(Loss):	December 31, 2016			June 30, 2016
Cumulative translation adjustment	$	(165,378	)	$	(122,018	)
Pension liability adjustment		(54,970	)		(58,445	)
Unrealized gains on hedging derivatives		119,539			103,891
Unrealized losses on available-for-sale securities		(121	)		(669	)
Total AOCI	$	(100,930	)	$	(77,241	)

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At December 31, 2016, we had approximately $9 million and $61.9 million of investments included in Other current assets and Non-current assets, respectively, in our Condensed Consolidated Balance Sheets that have been classified as available-for-sale securities. At June 30, 2016, we had approximately $8.9 million and $45.6 million of investments included in Other current assets and Non-current assets, respectively, in our Condensed Consolidated Balance Sheets that have been classified as available-for-sale securities. These securities are recorded at fair value with realized gains and losses recorded in income and unrealized gains and losses recorded in AOCI, net of taxes.

Note 16 – Restructuring Program

Our restructuring program that is designed to improve our global footprint, cost structure, technology portfolio, human resources and internal processes continues. For the three and six months ended December 31, 2016 and 2015, we continued to refine existing programs and launched new programs focused on achieving further productivity improvements to: (i) optimize certain research and development, supply chain and administrative functions; (ii) outsource certain manufacturing capabilities; (iii) divest or sublease facilities no longer needed to support current operations; and (iv) relocate certain functions to best cost countries.

A summary and components of our restructuring initiatives are presented below and include accruals for new programs as well as revisions to estimates, both increases and decreases, to programs accrued in prior periods:

	Severance Related Costs			Third Party Contractor Termination Costs			Facility Closure and Other Related Costs			Asset Impairments(1)			Total
Liability, June 30, 2016	$	18,068		$	435		$	5,691		$	-		$	24,194
Expense(2)		30,889			843			1,308			666			33,706
Accumulated depreciation offset		-			-			-			(666	)		(666	)
Payments		(7,660	)		-			(1,723	)					(9,383	)
Foreign currency translation		(477	)		9			5						(463	)
Liability, December 31, 2016	$	40,820		$	1,287		$	5,281		$	-		$	47,388
Liability, June 30, 2015	$	60,789		$	-		$	4,590		$	-		$	65,379
Expense(2)		1,112			372			629			3,964			6,077
Accumulated depreciation offset		-			-			-			(3,964	)		(3,964	)
Payments		(26,924	)		-			(1,130	)		-			(28,054	)
Foreign currency translation		(1,041	)		(7	)		2			-			(1,046	)
Liability, December 31, 2015	$	33,936		$	365		$	4,091		$	-		$	38,392

⁽¹⁾ Credits related to restructuring charges for accelerated depreciation and inventory provisions are recorded against the related assets in Property, plant and equipment, net or Inventories in our Condensed Consolidated Balance Sheets and do not impact the restructuring liability.

⁽²⁾ Restructuring expenses noted above are primarily in SG&A in our Condensed Consolidated Statements of Income. Asset impairments which consist of accelerated depreciation and inventory provisions are primarily in Cost of sales in our Condensed Consolidated Statements of Income.

Restructuring liabilities are recorded in Accrued liabilities and Other non-current liabilities in our Condensed Consolidated Balance Sheets.

Restructuring expenses by reporting business segment are presented below:

	Three Months Ended December 31,					Six Months Ended December 31,
	2016		2015			2016		2015
Connected Car	$	18,832	$	(443	)	$	20,245	$	(1,237	)
Lifestyle Audio		711		867			3,331		1,174
Professional Solutions		243		2,522			8,716		2,176
Connected Services		680		-			748		-
Other		-		-			-		-
Total		20,466		2,946			33,040		2,113
Asset Impairments		598		1,940			666		3,964
Total	$	21,064	$	4,886		$	33,706	$	6,077

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Note 17 – Retirement Benefits

Plan Descriptions

Retirement savings plan

We provide a Retirement Savings Plan (the “Savings Plan”) for certain employees in the United States. Under the Savings Plan, and subject to certain limitations: (i) employees may contribute up to 50 percent of their pretax compensation; (ii) each business unit will make a safe harbor non-elective contribution in an amount equal to three percent of a participant’s pre-tax compensation; and (iii) each business unit may also make a matching contribution of 50 percent of an employee’s tax-deferred compensation, up to the first six percent of a participant’s pre-tax compensation. Matching contributions vest at a rate of 25 percent for each year of service with the employer, beginning with the second year of service.

Pension benefits

We provide defined pension benefits to certain eligible employees. The measurement date used for determining pension benefits is the last day of our fiscal year, June 30^th. We have certain business units in Europe and Asia that maintain defined benefit pension plans for many of our current and former employees. The coverage provided and the extent to which the retirees’ share in the cost of the program vary by business unit. Generally, plan benefits are based on age, years of service and average compensation during the final years of service. In the United States, we have a Supplemental Executive Retirement Plan (the “SERP”) that provides retirement, death and termination benefits, as defined in the SERP, to certain key executives designated by our Board of Directors. The majority of our defined benefit plans do not have contractual or statutory provisions which specify minimum funding requirements. We are in compliance with all existing contractual obligations and statutory provisions.

The SERP is an unfunded plan for tax purposes and under the Employee Retirement Income Security Act of 1974 (“ERISA”) all obligations arising under the SERP are payable from our general assets. To assist in the funding of the benefits under the SERP, we maintain assets in an irrevocable trust whereby the use of these assets is restricted to funding our future benefit obligations under the SERP. These assets are not plan assets of the SERP, therefore, in the event of bankruptcy, the assets become unrestricted and the SERP would become a general creditor of our company. The assets and liabilities, and earnings and expenses, of the irrevocable trust are consolidated in our condensed consolidated financial statements. As of December 31, 2016 and June 30, 2016, there were $94.4 million and $92.7 million, respectively, of total assets included in the irrevocable trust of which $0.0 million and $0.1 million, respectively, in each period consisted of Cash and cash equivalents, $41.2 million and $40.8 million, respectively, consisted of the cash surrender value of life insurance policies and $53.2 million and $51.8 million, respectively, consisted of equity and fixed income mutual funds, which are classified as available-for-sale securities.

The following table presents the components of net periodic benefit cost for the three and six months ended December 31, 2016 and 2015:

	Three Months Ended December 31,						Six Months Ended December 31,
	2016			2015			2016			2015
Service cost	$	1,599		$	1,405		$	3,253		$	2,839
Interest cost		1,207			1,714			2,433			3,441
Expected return on plan assets		(27	)		(31	)		(55	)		(62	)
Amortization of prior service cost		214			247			428			494
Amortization of net loss		1,029			1,309			2,081			2,624
Curtailments and settlements		-			(90	)		-			(182	)
Net periodic benefit cost	$	4,022		$	4,554		$	8,140		$	9,154

During the three months ended December 31, 2016 and 2015, we made contributions of $2.5 million and $2.3 million, respectively, to the defined benefit pension plans which were paid to participants.  During the six months ended December 31, 2016 and 2015, we made contributions of $5.1 million and $4.7 million, respectively, to the defined benefit pension plans which were paid to participants.  We expect to make approximately $5.2 million in contributions for the remainder of the fiscal year ending June 30, 2017.

Note 18 – Business Segment Data

Effective July 1, 2016, we revised our business segments in order to better align them with our strategic approach to the markets and customers we serve. Prior period segment amounts throughout the condensed consolidated financial statements have been reclassified to the new segment structure. The reclassification of historical business segment information had no impact on our basic financial statements.

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The accounting principles applied at the operating segment level in determining income (loss) from operations are the same as those applied at the consolidated financial statement level. Goodwill was allocated to our segments based on the relative fair value of the components of our reporting units that were affected by our change in segments. Refer to Note 8 – Goodwill and Intangible Assets, Net for more information.

We design and engineer connected products and solutions, including connected car, audio and visual products, enterprise automation solutions and connected services for consumers, automakers, and enterprises worldwide. Our chief operating decision maker evaluates performance and allocates resources based on net sales, operating income and working capital in each of the operating segments which are also our reporting segments.

Connected Car

Our Connected Car segment designs, manufactures and markets connected car systems for vehicle applications to be installed primarily as original equipment by automotive manufacturers. Our scalable connected car platforms deliver enhanced and connected capabilities to the car, including intelligent high-performance navigation with embedded solutions for multimedia, premium entertainment tuners, and on-board and off-board connectivity that addresses a wide range of vehicle categories. Leveraging a software-driven computer platform, we offer an integrated suite of technologies that extends beyond infotainment to encompass telematics, connected safety, and over-the-air update capabilities.  We also offer a comprehensive suite of automotive cyber security solutions through a multi-layer architecture that can protect not only future vehicles, but connected cars on the road today. Global customers for our connected car systems include BMW, Daimler, Fiat Chrysler Automobiles, Ford, Geely, General Motors, Hyundai, Qoros, Subaru, Suzuki, TATA, Toyota/Lexus, Ssangyong, the Volkswagen Group and Yamaha. We also produce an infotainment system for Harley-Davidson touring motorcycles.

Lifestyle Audio

Our Lifestyle Audio segment designs, manufactures and markets car audio systems for vehicle applications to be installed primarily as original equipment by automotive manufacturers, as well as a wide range of consumer audio products including mid-to high-end loudspeaker and electronics, headphones, embedded audio products for consumer electronics and branded portable wireless speakers. Our Lifestyle Audio segment also now includes our car audio aftermarket services business which was previously included in our Connected Services segment. We believe that we continue to redefine audio excellence for the home, the car and on-the-go listening. Our Lifestyle Audio products are marketed worldwide under renowned brand names including AKG^®, Harman/Kardon^®, Infinity^®, JBL^®, JBL Professional, JBL Synthesis^®, Lexicon^®, Mark Levinson^® and Revel^®.  We also have rights to use the Bowers & Wilkins^®, Bang & Olufsen^® and Canton^® brand names within the automotive space. Global customers for our premium car audio systems include Aston Martin, BMW, Brilliance, Chang’an, Daimler, Dongfeng, Fiat Chrysler Automobiles, Ford, Geely, General Motors, Great Wall, Hyundai, McLaren, PSA Peugeot Citroën, SAIC, Subaru, Tesla, Toyota/Lexus and the Volkswagen Group. Our car audio products feature innovative technologies such as Clari-Fi^TM, HALOsonic^TM and Quantum Logic Surround™.  Our consumer audio products are sold in mass-market retail stores such as Apple, Best Buy, Target, Media Markt and Fnac, specialty audio stores, Harman stores, through online retailers such as Amazon.com, and directly online at Harmanaudio.com.

Professional Solutions

Our Professional Solutions segment designs, manufactures and markets an extensive range of audio, lighting, video and control, and automation solutions for entertainment and enterprise applications, including live concerts and festivals, stadiums, airports, hotels and resorts, conference centers, educational institutions, command centers and houses of worship. We offer a variety of products, including loudspeakers, amplifiers, digital signal processors, microphones, headphones, mixing consoles, guitar pedals, lighting, video and control, and enterprise automation solutions. Our Professional Solutions audio products are used at important events in prestigious venues, such as the GRAMMY® Awards, the Emmy® Awards, the Super Bowl®, the Oscars®, the MTV® Video Music Awards, the Country Music Awards®  and Yankee Stadium. Our Professional Solutions products are marketed globally under a number of well-established brand names, including AKG, AMX^®, BSS^®, Crown^®, dbx^®, DigiTech^®, JBL Professional, Lexicon, Martin^®, Soundcraft^® and Studer^®.

Connected Services

Our Connected Services segment includes the operating results of Symphony Teleca Corporation (“STC”), and Redbend and our automotive services business. Our Connected Services segment creates innovative software solutions that integrate design, mobility, cloud and analytics and brings the benefits of the connected world to the automotive, retail, mobile, healthcare, media and consumer electronics markets. Our Connected Services segment offers services and solutions in order to help customers understand and visualize their data so they can make faster and more informed decisions, cloud-enable their businesses, support technical agility and exploit omni-channel strategies. Our Connected Services segment customers include BMW, British Telecom, Daimler, Jaguar Land Rover, Microsoft, Polycom and the Volkswagen Group.

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Other

Other includes compensation, benefits and occupancy costs for corporate employees, net of reporting segment allocations, expenses associated with new technology innovation and our corporate brand identity campaign.

The following tables report Net sales and Operating income (loss) by each reporting segment for the three and six months ended December 31, 2016 and 2015:

	Three Months Ended December 31,						Six Months Ended December 31,
	2016			2015			2016			2015
Net sales:
Connected Car	$	769,299		$	736,969		$	1,566,416		$	1,492,452
Lifestyle Audio		765,022			641,309			1,333,404			1,117,380
Professional Solutions		255,650			248,871			495,873			495,977
Connected Services		173,308			153,540			339,979			313,453
Other		-			-			-			39
Eliminations **		(15,805	)		(8,532	)		(28,676	)		(16,256	)
Total	$	1,947,474		$	1,772,157		$	3,706,996		$	3,403,045
Operating income (loss):
Connected Car	$	76,958		$	84,266		$	171,876		$	171,485
Lifestyle Audio		125,798			83,018			204,480			130,271
Professional Solutions		10,228			23,952			21,910			49,637
Connected Services		19,629			4,865			21,192			10,496
Other		(58,599	)		(36,948	)		(94,633	)		(71,269	)
Total	$	174,014		$	159,153		$	324,825		$	290,620

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	Three Months Ended December 31, 2016
	Net Sales			Eliminations **			Third Party Sales
Net sales:
Connected Car	$	769,299		$	(6	)	$	769,293
Lifestyle Audio		765,022			(762	)		764,260
Professional Solutions		255,650			(1,020	)		254,630
Connected Services		173,308			(14,017	)		159,291
Other		-			-			-
Eliminations **		(15,805	)		15,805			-
Total	$	1,947,474		$	-		$	1,947,474
	Three Months Ended December 31, 2015
	Net Sales			Eliminations **			Third Party Sales
Net sales:
Connected Car	$	736,969		$	-		$	736,969
Lifestyle Audio		641,309			(736	)		640,573
Professional Solutions		248,871			(596	)		248,275
Connected Services		153,540			(7,200	)		146,340
Other		-			-			-
Eliminations **		(8,532	)		8,532			-
Total	$	1,772,157		$	-		$	1,772,157
	Six Months Ended December 31, 2016
	Net Sales			Eliminations **			Third Party Sales
Net sales:
Connected Car	$	1,566,416		$	(22	)	$	1,566,394
Lifestyle Audio		1,333,404			(1,452	)		1,331,952
Professional Solutions		495,873			(1,503	)		494,370
Connected Services		339,979			(25,699	)		314,280
Other		-			-			-
Eliminations **		(28,676	)		28,676			-
Total	$	3,706,996		$	-		$	3,706,996
	Six Months Ended December 31, 2015
	Net Sales			Eliminations **			Third Party Sales
Net sales:
Connected Car	$	1,492,452		$	-		$	1,492,452
Lifestyle Audio		1,117,380			(1,270	)		1,116,110
Professional Solutions		495,977			(1,369	)		494,608
Connected Services		313,453			(13,617	)		299,836
Other		39			-			39
Eliminations **		(16,256	)		16,256			-
Total	$	3,403,045		$	-		$	3,403,045

 **Represents elimination of inter-segment activity.

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Note 19 – Significant Customers

Presented below are the percentages of net sales to, and net accounts receivables due from, customers who represent ten percent or more of our net sales or net accounts receivable, as follows:

	Net Sales						Net Sales						Accounts Receivable, Net
	Three Months Ended						Six Months Ended
	December 31,						December 31,						December 31,			June 30,
	2016			2015			2016			2015			2016			2016
BMW		11	%		11	%		12	%		13	%		6	%		9	%
Fiat Chrysler Automobiles		12	%		14	%		14	%		14	%		17	%		17	%
The Volkswagen Group		12	%		13	%		12	%		14	%		4	%		9	%
Other customers		65	%		62	%		62	%		59	%		73	%		65	%
Total		100	%		100	%		100	%		100	%		100	%		100	%

Note 20 – Commitments and Contingencies

At December 31, 2016, we were subject to legal claims and litigation arising in the ordinary course of business, including the matter described below. The outcome of this legal action cannot be predicted with certainty; however, management, based upon advice from legal counsel, believes such action is either without merit or will not have a material adverse effect on our financial condition, results of operations or cash flows.

In re Harman International Industries, Inc. Securities Litigation

On October 1, 2007, a purported class action lawsuit was filed by Cheolan Kim (the “Kim Plaintiff”) against Harman and certain of our officers in the United States District Court for the District of Columbia (the “Court”) seeking compensatory damages and costs on behalf of all persons who purchased our common stock between April 26, 2007 and September 24, 2007 (the “Class Period”). The original complaint alleged claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 10b-5 promulgated thereunder.

The complaint alleged that the defendants omitted to disclose material adverse facts about Harman’s financial condition and business prospects. The complaint contended that had these facts not been concealed at the time the merger agreement with Kohlberg, Kravis, Roberts & Co. and Goldman Sachs Capital Partners was entered into, there would not have been a merger agreement, or it would have been at a much lower price, and the price of our common stock therefore would not have been artificially inflated during the Class Period. The Kim Plaintiff alleged that, following the reports that the proposed merger was not going to be completed, the price of our common stock declined, causing the plaintiff class significant losses.

On November 30, 2007, the Boca Raton General Employees’ Pension Plan filed a purported class action lawsuit against Harman and certain of our officers in the Court seeking compensatory damages and costs on behalf of all persons who purchased our common stock between April 26, 2007 and September 24, 2007. The allegations in the Boca Raton complaint are essentially identical to the allegations in the original Kim complaint, and like the original Kim complaint, the Boca Raton complaint alleges claims for violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder.

On January 16, 2008, the Kim Plaintiff filed an amended complaint. The amended complaint, which extended the Class Period through January 11, 2008, contended that, in addition to the violations alleged in the original complaint, Harman also violated Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder by “knowingly failing to disclose “significant problems” relating to its PND sales forecasts, production, pricing, and inventory” prior to January 14, 2008. The amended complaint claimed that when “Defendants revealed for the first time on January 14, 2008 that shifts in PND sales would adversely impact earnings per share by more than $1.00 per share in fiscal 2008,” that led to a further decline in our share value and additional losses to the plaintiff class.

On February 15, 2008, the Court ordered the consolidation of the Kim action with the Boca Raton action, the administrative closing of the Boca Raton action, and designated the short caption of the consolidated action as In re Harman International Industries, Inc. Securities Litigation, civil action no. 1:07-cv-01757 (RWR). That same day, the Court appointed the Arkansas Public Retirement System as lead plaintiff (“Lead Plaintiff”) and approved the law firm Cohen, Milstein, Hausfeld and Toll, P.L.L.C. to serve as lead counsel.

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On May 2, 2008, Lead Plaintiff filed a consolidated class action complaint (the “Consolidated Complaint”). The Consolidated Complaint, which extended the Class Period through February 5, 2008, contended that Harman and certain of our officers and directors violated Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder, by issuing false and misleading disclosures regarding our financial condition in fiscal year 2007 and fiscal year 2008. In particular, the Consolidated Complaint alleged that defendants knowingly or recklessly failed to disclose material adverse facts about MyGIG radios, personal navigation devices and our capital expenditures. The Consolidated Complaint alleged that when Harman’s true financial condition became known to the market, the price of our common stock declined significantly, causing losses to the plaintiff class.

On July 3, 2008, defendants moved to dismiss the Consolidated Complaint in its entirety. Lead Plaintiff opposed the defendants’ motion to dismiss on September 2, 2008, and defendants filed a reply in further support of their motion to dismiss on October 2, 2008.

On April 12, 2012, In re Harman International Industries, Inc. Securities Litigation, civil action no. 1:07-cv-01757 (D.D.C.) was reassigned to Judge Rudolph Contreras.

On September 5, 2012, the Court heard oral arguments on defendants’ motion to dismiss. At the request of the Court, on September 24, 2012, each side submitted a supplemental briefing on defendants’ motion to dismiss. On January 17, 2014, the Court granted a motion to dismiss, without prejudice. The Lead Plaintiff appealed this ruling to the U.S. Court of Appeals for the District of Columbia Circuit (the “Court of Appeals”) and, on June 23, 2015, the District Court’s ruling was reversed and remanded for further proceedings. On July 23, 2015, the defendants filed a motion for a rehearing en banc before the Court of Appeals, which was denied on August 26, 2015. The defendants filed a petition for a writ of certiorari seeking U.S. Supreme Court review on November 24, 2015, which was denied on February 29, 2016. Discovery in this matter is ongoing.

Connected Car Supply Arrangements

We have arrangements with our Connected Car customers to provide products that meet predetermined technical specifications and delivery dates. In the event that we do not satisfy the performance obligations under these arrangements, we may be required to indemnify the customer. We accrue for any loss that we expect to incur under these arrangements when that loss is probable and can be reasonably estimated.  For the three months ended December 31, 2016 and 2015, we did not recognize any gains or losses related to these arrangements. For the six months ended December 31, 2016 and 2015, we recognized $0.9 million of costs relating to delayed delivery of a product to a Connected Car customer and $3.9 million of gains relating to losses that we no longer expect to incur, respectively. An inability to meet performance obligations on connected car platforms to be delivered in future periods could adversely affect our results of operations, cash flows and financial condition in future periods.

Note 21 – Related Party Transactions

Singularity University

In fiscal year 2015, we joined Singularity University’s Innovation Partnership Program, which is an innovation ecosystem for Fortune 500 companies to collaborate in the areas of technology, entrepreneurship, innovation and business strategy. In fiscal year 2015, we also purchased a Corporate Labs Membership from Singularity University (“Singularity”), providing Harman with access to educational programs, facilities and network connections. Payments to Singularity in fiscal years 2016 and 2015 totaled, in the aggregate, approximately $415,000 and $575,000, respectively. Robert Nail, who was appointed as a member of our Board of Directors on September 15, 2015, is an Associate Founder and the Chief Executive Officer of Singularity. He owns approximately 5.6% of the outstanding equity of Singularity.

Note 22 – Acquisitions

TowerSec Ltd.

On March 10, 2016 (the “TowerSec Acquisition Date”), Harman Becker Automotive Systems Manufacturing Kft, our indirect wholly-owned subsidiary (“Harman Becker Kft”), acquired all of the outstanding shares of TowerSec (the “TowerSec Acquisition”), a global automotive cyber security company, for a purchase price of $45.0 million, subject to certain adjustments (the “TowerSec Adjustments”). On the TowerSec Acquisition Date we paid $37.9 million which excludes $2.3 million for an indemnification holdback and $3.0 million for a deferred consideration amount (the “Deferred Consideration Amount”). The indemnification holdback will be released following the 18 month anniversary of the TowerSec Acquisition Date, if not used.  The Deferred Consideration Amount will be released on the second anniversary of the TowerSec Acquisition Date.  Approximately $2.6 million of third-party debt was assumed and paid off at the closing. The TowerSec Adjustments were finalized during the fiscal year ended June 30, 2016 and we recorded an increase to the purchase price of approximately $0.1 million. The TowerSec Acquisition is also subject to an earn-out of up to $30.0 million, contingent on TowerSec’s achievement of certain targetsthroughMarch 10, 2019. Our preliminary estimate of the fair value of this contingent consideration liability is $27.7 million.

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The total cost of the TowerSec Acquisition was allocated to the assets acquired and liabilities assumed based on their fair values at the TowerSec Acquisition Date, as follows:

	March 10, 2016
Cash and cash equivalents	$	472
Other current assets		84
Total current assets		556
Property, plant and equipment		205
Goodwill		69,438
Intangible assets		4,600
Other non-current assets		89
Total assets		74,888
Accounts payable		119
Accrued liabilities		66
Total current liabilities		185
Other non-current liabilities		3,723
Total liabilities		3,908
Net assets	$	70,980

Based on our valuation, goodwill and intangibles were recorded in connection with the TowerSec Acquisition based on third-party valuations and management’s estimates for those acquired intangible assets. Goodwill was calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. None of the goodwill recognized is deductible for tax purposes. Intangible assets include internally developed technology of $4.6 million with an approximate useful life of six years. Expenses of $0.6 million were recognized in connection with this acquisition and are included in SG&A in our Condensed Consolidated Statement of Income for the quarter ended March 31, 2016. The operating results of TowerSec are included in our condensed consolidated financial statements from the TowerSec Acquisition Date within our Connected Car segment. Pro forma financial information has not been provided as the TowerSec Acquisition is not material to our results of operations.

Southern Vision Systems, Inc.

On June 10, 2015 (the “SVSI Acquisition Date”), Harman Professional, Inc., our wholly-owned subsidiary, acquired all of the issued and outstanding shares of SVSI (the “SVSI Acquisition”), a developer, manufacturer and marketer of audio/video over internet protocol products and services, for a total purchase price of $20.0 million, subject to certain adjustments (the “SVSI Adjustments”). On the SVSI Acquisition Date we paid $19.5 million which excludes $2.4 million for certain indemnification holdbacks. During the three and six months ended December 31, 2016, the $2.4 million indemnification holdbacks were released to the sellers. The SVSI Adjustments were finalized during the three months ended September 30, 2015 and we recorded an increase to the purchase price of approximately $0.1 million. The SVSI Acquisition is also subject to an earn-out of up to $10.0 million to be paid in fiscal years 2017, 2018 and 2019, based upon the achievement of certain contribution margin targets related to the sale of certain products through fiscal year 2018. Our estimate of the fair value of this contingent consideration liability is $3.0 million at the end of the measurement period for this acquisition. During the three months ended September 30, 2016, we made a contingent consideration payment of $2.1 million related to fiscal year 2016 results. Refer to Note 14- Fair Value Measurements for more information on our ongoing evaluation of this contingent consideration liability.

Bang & Olufsen Automotive Assets

On June 1, 2015 (the “B&O Acquisition Date”), we acquired certain automotive assets and liabilities of Bang &Olufsen A/S (“B&O”), a developer of home audio systems and car audio solutions, including a perpetual exclusive license to use the Bang & Olufsen and B&O Play^® trademarks, for a total purchase price of €150.8 million (the “B&O Preliminary Purchase Price”) or approximately $165.7 million (the “B&O Acquisition”), subject to a final purchase price adjustment (the “B&O Adjustment”). On the B&O Acquisition Date, we paid the B&O Preliminary Purchase Price, of which €12.5 million was placed in escrow for certain indemnification matters. The B&O Adjustment was finalized during the three months ended September 30, 2015 and we recorded a decrease to the purchase price of approximately €0.5 million or $0.5 million. During the three months ended September 30, 2016, the €12.5 million placed in escrow was released to the sellers.

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Symphony Teleca Corporation

On April 8, 2015 (the “STC Acquisition Date”), we acquired all of the outstanding shares of STC (the “STC Acquisition”), a global software services company, that provides software, engineering and integration services, for an estimated total base purchase price of $720.8 million (the “STC Purchase Price”), of which $491.5 million was paid at closing, consisting of $299.7 million in cash and $191.8 million in shares of our common stock. Approximately $115.6 million of third-party debt was assumed and paid off at closing and we also acquired $61.9 million of cash, of which $14.8 million was restricted, related to the acquisition of the remaining portion of a non-controlling interest that we did not own at the STC Acquisition Date. The STC Acquisition was subject to an earn-out which was based upon STC’s calendar year 2015 revenue. The STC Acquisition was also subject to a final base purchase price adjustment (the “Final Base Purchase Price Adjustment”) comprised of both a net debt and net working capital component which was estimated to be $0.  

During the fiscal year ended June 30, 2016, the calculation of the remainder of the STC Purchase Price and the earn-out (the “Additional Payments”) of $231.1 million and $23.3 million, respectively, and the Final Base Purchase Price Adjustment of $0 were finalized and settled in cash. There is a $42.0 million holdback related to specified indemnification matters which was withheld from our settlement of the Additional Payments. There are also holdbacks of $31.2 million and $21.0 million which were placed in separate escrow accounts to be used for other specified indemnification matters. The amounts placed in escrow or withheld from the Additional Payments will be released based on certain defined events.  

Red Bend Ltd.

On February 26, 2015 (the “Redbend Acquisition Date”), Harman Becker Kft acquired all of the outstanding shares of Redbend, a provider of software management technology for connected devices, over-the-air software and firmware upgrading services, in a cash and stock transaction valued at approximately $195.3 million (the “Redbend Acquisition”), of which $71.0 million was paid in cash and $124.3 million was paid in shares of our common stock (the “Redbend Purchase Price”), subject to certain adjustments (the “Post-Closing Adjustment”). Approximately $5.6 million of third party debt was assumed and paid off at the closing. The Redbend Acquisition is also subject to an earn-out of up to $30.0 million to be paid in the third quarter of fiscal year 2017, based upon the achievement of Redbend’s cumulative bookings target for awarded business from January 1, 2015 through December 31, 2016. Our estimate of the fair value of this contingent consideration liability is $20.9 million at the end of the measurement period. Refer to Note 14- Fair Value Measurements for more information on our ongoing evaluation of this contingent consideration liability.  Our final calculation of the Post-Closing Adjustment was $0.4 million, which was paid during the fiscal year ended June 30, 2015. Approximately $16.0 million of the Redbend Purchase Price was placed in escrow for certain indemnification matters. During the three months ended September 30, 2016, approximately $15.4 million of the amounts placed in escrow were released to the sellers.

S1nn GmbH & Co. KG

On February 1, 2015 (the “S1nn Acquisition Date”), Harman Becker Automotive Systems GmbH (“HBAS”), our indirect wholly-owned subsidiary, acquired all of the issued and outstanding shares of S1nn GmbH & Co. KG (“S1nn”), a developer of infotainment systems, connectivity and car audio solutions, for a total purchase price of €49.0 million or approximately $55.4 million, which includes €4.1 million, or approximately $4.6 million, placed in escrow for certain indemnification holdbacks. During the three months ended September 30, 2016, €2.6 million or approximately $2.9 million of the amounts placed in escrow were released to the sellers. The remaining €1.5 million or approximately $1.7 million was released to us for specified indemnification matters.

I.P.S.G./VFX

On December 30, 2014 (the “IPSG/VFX Acquisition Date”), Harman International Industries Pty. Ltd., our indirect wholly-owned subsidiary, acquired all of the outstanding shares of IPSG/VFX (the “IPSG/VFX Acquisition”), a developer, manufacturer and distributor of audio products, for an aggregate purchase price of $5.0 million, less certain adjustments determined at the IPSG/VFX Acquisition Date (the “IPSG/VFX Purchase Price”), which was paid in cash on the IPSG/VFX Acquisition Date. The IPSG/VFX Acquisition is subject to cumulative earn-outs of up to $8.0 million payable primarily based on expectations of the gross profit of IPSG/VFX (the “IPSG/VFX Contingent Consideration”). The IPSG/VFX Purchase Price and the IPSG/VFX Contingent Consideration are subject to a holdback of 15 percent payable contingent upon the outcome of certain events within 18 months of the IPSG/VFX Acquisition Date. During the three months ended September 30, 2016, a holdback of $0.7 million was released to the sellers. Our preliminary value of the IPSG/VFX Contingent Consideration liability was $0 at the end of the measurement period for this acquisition. Refer to Note 14- Fair Value Measurements for more information on our ongoing evaluation of this contingent consideration liability.

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Note 23 – Accounts Payable

Beginning in fiscal year 2015, we entered into an agreement with a third party to provide an accounts payable tracking system which allows participating suppliers to sell our payment obligations to designated third-party financial institutions. Participating suppliers may, at their sole discretion, make offers to sell one or more of our payment obligations prior to their scheduled due dates, at a discounted price, to participating financial institutions. Our goal in entering into this agreement is to capture overall supplier savings, in the form of pricing and payment terms, created by facilitating the supplier’s ability to sell payment obligations, while providing them with greater working capital flexibility. We have no economic interest in the sale of these suppliers’ receivables and no direct financial relationship with the financial institutions concerning these services. Our obligations to our suppliers, including amounts due and scheduled payment dates, are not impacted by a supplier’s decision to sell amounts under this arrangement; however, our right to offset balances due from suppliers against payment obligations is restricted by this agreement for those payment obligations that have been sold by suppliers. As of December 31, 2016 and June 30, 2016, $253.5 million and $316.6 million, respectively, of our outstanding payment obligations had been placed in the accounts payable tracking system, and participating suppliers had sold $103.7 million and $149.6 million, respectively, of those payment obligations to participating financial institutions.

Note 24 – Subsequent Events

Dividend Declaration

On January 26, 2017 we declared a cash dividend of $0.35 per share for the quarter ended December 31, 2016. The quarterly dividend will be paid on February 22, 2017 to each stockholder of record as of the close of business on February 6, 2017.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

Samsung Acquisition

On November 14, 2016, Samsung Electronics Co. Ltd. (“Samsung”) and Harman announced that the companies have entered into a definitive merger agreement (the “Merger Agreement”), under which an indirect, wholly-owned subsidiary of Samsung will acquire all of the outstanding shares of Harman and Harman will become an indirect, wholly-owned subsidiary of Samsung (the “Merger”). Under the terms of the Merger Agreement, Harman shareholders will receive, for each Harman share held by such shareholders, $112 in cash at closing (the “Merger Consideration”). The completion of the Merger is subject to customary closing conditions including, among others, approval by our shareholders and various regulatory approvals.  The transaction is expected to close by the middle of calendar year 2017. Refer to Harman’s definitive proxy statement filed with the Securities and Exchange Commission on January 17, 2017 for additional information on the transaction. We cannot guarantee that the Merger will be completed or that, if completed, it will be exactly on the terms as set forth in the Merger Agreement.  For additional information regarding certain risks related to the Merger see the information under the caption “Risk Factors” which is located in Item 1A of Part II of this Quarterly Report on Form 10-Q.

Effective July 1, 2016, we revised our business segments in order to better align them with our strategic approach to the markets and customers we serve. Our car audio aftermarket services business, which had previously been included within our Connected Services segment, is now included in our Lifestyle Audio segment.

Prior period segment amounts throughout the condensed consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations have been reclassified to conform to the current segment structure. The reclassification of historical business segment information had no impact on our basic financial statements.

The following discussion should be read in conjunction with the accompanying unaudited Condensed Consolidated Financial Statements and the related notes included in Item 1 of this Quarterly Report on Form 10-Q, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K, for the fiscal year ended June 30, 2016 (our “2016 Annual Report”). This discussion contains forward-looking statements which are based on our current expectations and experience and our perception of historical trends, current market conditions, including customer acceptance of our new products, current economic data, expected future developments, foreign currency exchange rates, and other factors that we believe are appropriate under the circumstances. These statements involve risks and uncertainties that could cause actual results to differ materially from those suggested in the forward-looking statements. Unless otherwise indicated, “Harman,” “Company,” “we,” “our,” and “us” are used interchangeably to refer to Harman International Industries, Incorporated and its consolidated subsidiaries. All amounts are in thousands unless otherwise indicated.

Executive Overview

We believe we are a leader in the design and engineering of connected products and solutions for automakers, consumers and enterprises worldwide, including connected car systems, audio and visual products, enterprise automation solutions and connected services. We have developed, both internally and through a series of strategic acquisitions, a broad range of product offerings sold under renowned brand names in our principal markets. Our AKG^®, AMX^®, Crown^®, Harman/Kardon^®, Infinity^®, JBL^®, JBL Professional, JBL Synthesis^®, Lexicon^®, Mark Levinson^®, Martin^®, Revel^®, Soundcraft^® and Studer^® brand names are well known worldwide for premium quality and performance. Our software solutions power mobile devices and systems that are designed to be connected, integrated, personalized and adaptive across all platforms, from work and home, to car and mobile.

We report our business on the basis of four segments. Our Connected Car, Lifestyle Audio, Professional Solutions and Connected Services segments are based on our strategic approach to the markets and customers we serve. Other primarily includes compensation, benefit and occupancy costs for corporate employees, net of reporting segment allocations, expenses associated with new technology innovation and our corporate brand identity campaign.  

We believe that innovation is an important element to gaining market acceptance of our products and strengthening our market position. We have a history of leveraging our continuous technological innovation across all of the markets we serve. We have a well-deserved reputation for delivering premium audio and connected car solutions across a full spectrum of applications. We believe that our technological innovation, the quality of our products and our reputation for on-time delivery have resulted in Harman being awarded a substantial amount of Connected Car and Lifestyle Audio automotive business. As of June 30, 2016, we have a cumulative estimated $24.1 billion of awarded Connected Car and Lifestyle Audio automotive business, which represents the estimated future lifetime net sales for all our automotive customers. This amount does not represent firm customer orders. We report our awarded business primarily based on award letters from our customers. To validate these awards, we use various assumptions, including global vehicle production forecasts, customer take rates for our products, revisions to product life-cycle estimates and the impact of annual price reductions and exchange rates, among other factors. The term “take rate” represents the number of units sold by us divided by an

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estimate of the total number of vehicles of a specific vehicle line produced during the same timeframe. The assumptions we use to validate these awards are updated and reported externally on an annual basis. We believe our awarded automotive business will position us well for follow-on and new business with these existing customers.

Our management uses the amount of our awarded business for short- and long-term budgeting and forecasting, development of earnings guidance and for planning future corporate investment and other activities, such as capital expenditures and restructuring. Our awarded business is also an input used to approximate our enterprise value. We believe our investors utilize this information for a number of reasons, including evaluating our future financial performance over time, to model our financial results of operations, to understand the risks inherent in our current operating plan, and as an input to approximate our enterprise value. However, our estimates of awarded automotive business are forward-looking statements and may not actually be achieved. See the risk factor “We may not realize sales represented by awarded business” in Item 1A “Risk Factors” of Part I of our 2016 Annual Report.

Our products are sold worldwide, with the largest markets located in the United States and Germany. In the United States, our primary manufacturing facilities are located in Kentucky, Indiana and Washington. Outside of the United States, we have manufacturing facilities in Austria, Brazil, China, Hungary, India, Germany, and Mexico.

Our sales and earnings may vary due to the production schedules and model year changeovers of our automotive customers, the holiday buying season for consumer audio products, customer acceptance of our products, the timing of new product introductions, product offerings by our competitors, fluctuations in the timing of contractual agreements for customer reimbursements for research, development and engineering expenses (“RD&E”) and general economic conditions. Since most of our businesses operate using local currencies, our reported sales and earnings may also fluctuate due to fluctuations in foreign currency exchange rates, especially with respect to the value of the Euro and the U.S. Dollar.

We believe opportunities exist to grow our business in all of our business segments in emerging markets such as Brazil, Russia, India and China (“BRIC”). During the three months ended December 31, 2016, BRIC sales to our end market customers increased $92.7 million to $358.1 million, an increase of 34.9 percent over the same period in the prior fiscal year. During the six months ended December 31, 2016, BRIC sales to our end market customers increased $183.5 million to $671.0 million, an increase of 37.6 percent over the same period in the prior fiscal year.

We continue to roll out our global marketing campaign featuring some of the world’s most prominent organizations, artists, celebrities and athletes such as the National Basketball Association, Stephen Curry, Quincy Jones, DNCE, Demi Lovato, and Linkin Park, in order to increase brand awareness and support growth and market share gains across our entire business.

Critical Accounting Policies

Recently Adopted Accounting Standards

For the three and six months ended December 31, 2016, there were no significant changes to our critical accounting policies and estimates from those disclosed in the consolidated financial statements and the related notes included in our 2016 Annual Report, except for recently adopted accounting standards disclosed in Note 2 – New Accounting Standards in the Notes to the Condensed Consolidated Financial Statements for the three and six months ended December 31, 2016.

Recently Issued Accounting Standards

Refer to Note 2 – New Accounting Standards in the Notes to the Condensed Consolidated Financial Statements for a summary of recently issued accounting standards.

Results of Operations

Net Sales

Net sales for the three months ended December 31, 2016 were $1.947 billion compared to $1.772 billion in the same period in the prior year, an increase of 9.9 percent, or 10.7 percent excluding foreign currency translation. Net sales increased due to growth in all of our segments primarily due to the impact of strong demand for connected smart audio products and headphones in consumer audio and growth in our automotive businesses offset by unfavorable foreign currency translation of $12.3 million.

Net sales for the six months ended December 31, 2016 were $3.707 billion compared to $3.403 billion in the same period in the prior year, an increase of 8.9 percent, or 9.4 percent excluding foreign currency translation. Net sales increased due to growth in our Lifestyle Audio, Connected Car, and Connected Services segments primarily due to the impact of strong demand for connected smart

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audio products and headphones in consumer audio and growth in our automotive businesses offset by unfavorable foreign currency translation of $13.1 million.

A summary of our net sales by business segment is presented below:

	Three Months Ended December 31,												Six months ended December 31,
	2016			%			2015			%			2016			%			2015			%
Net sales:
Connected Car	$	769,299			39.5	%	$	736,969			41.6	%	$	1,566,416			42.3	%	$	1,492,452			43.9	%
Lifestyle Audio		765,022			39.3	%		641,309			36.2	%		1,333,404			36.0	%		1,117,380			32.8	%
Professional Solutions		255,650			13.1	%		248,871			14.0	%		495,873			13.4	%		495,977			14.6	%
Connected Services		173,308			8.9	%		153,540			8.7	%		339,979			9.2	%		313,453			9.2	%
Other		-			0.0	%		-			0.0	%		-			0.0	%		39			0.0	%
Eliminations**		(15,805	)		-0.8	%		(8,532	)		-0.5	%		(28,676	)		-0.8	%		(16,256	)		-0.5	%
Total	$	1,947,474			100	%	$	1,772,157			100	%	$	3,706,996			100	%	$	3,403,045			100	%

** Represents elimination of inter-segment activity

Connected Car – Net sales for the three months ended December 31, 2016 increased $32.3 million, or 4.4 percent, compared to the same period in the prior year, or 5.0 percent excluding foreign currency translation. The increase in net sales was driven by the expansion of recently launched programs and stronger production, partially offset by unfavorable foreign currency translation of $4.5 million.

Net sales for the six months ended December 31, 2016 increased $74.0 million, or 5.0 percent, compared to the same period in the prior year, or 5.2 percent excluding foreign currency translation. The increase in net sales was driven by the expansion of recently launched programs and stronger production, partially offset by unfavorable foreign currency translation of $3.1 million.

Lifestyle Audio – Net sales for the three months ended December 31, 2016 increased $123.7 million, or 19.3 percent, compared to the same period in the prior year, or 19.7 percent excluding foreign currency translation. The increase in net sales was driven by stronger demand for connected smart audio products and headphones in consumer audio and stronger automotive production in car audio, partially offset by unfavorable foreign currency translation of $2.3 million.

Net sales for the six months ended December 31, 2016 increased $216.0 million, or 19.3 percent, compared to the same period in the prior year, or 19.5 percent excluding foreign currency translation. The increase in net sales was driven by stronger demand for connected smart audio products and headphones in consumer audio and stronger automotive production in car audio, partially offset by unfavorable foreign currency translation of $1.9 million.

Professional Solutions – Net sales for the three months ended December 31, 2016 increased $6.8 million, or 2.7 percent, compared to the same period in the prior year, or 3.1 percent excluding foreign currency translation due to stronger sales in Asia, partially offset by unfavorable foreign currency translation of $1.0 million.

Net sales for the six months ended December 31, 2016 decreased $0.1 million, or 0 percent, compared to the same period in the prior year, or 0.4 percent excluding foreign currency translation due to unfavorable foreign currency translation of $2.1 million, partially offset by stronger sales.

Connected Services – Net sales for the three months ended December 31, 2016 increased $19.8 million, or 12.9 percent, compared to the same period in the prior year, or 16.4 percent excluding foreign currency translation. The increase in net sales was primarily driven by higher demand for automotive services, partially offset by unfavorable foreign currency translation of $4.6 million.

Net sales for the six months ended December 31, 2016 increased $26.5 million, or 8.5 percent, compared to the same period in the prior year, or 11.1 percent excluding foreign currency translation. The increase in net sales was primarily driven by higher demand for automotive services, partially offset by unfavorable foreign currency translation of $7.3 million.

Gross Profit

Gross profit as a percentage of net sales increased 0.4 percentage points to 31.2 percent for the three months ended December 31, 2016 compared to 30.8 percent in the same period in the prior year. The increase in overall gross profit as a percentage of net sales was driven by our Lifestyle Audio and Connected Car segments partially offset by decreases in overall gross profit as a percentage of net sales in our Professional Solutions and Connected Services segments.

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Gross profit as a percentage of net sales increased 0.7 percentage points to 31.0 percent for the six months ended December 31, 2016 compared to 30.3 percent in the same period in the prior year. The increase in overall gross profit as a percentage of net sales was driven by our Lifestyle Audio and Connected Car segments partially offset by decreases in overall gross profit as a percentage of net sales in our Professional Solutions and Connected Services segments.

A summary of our gross profit by business segment is presented below:

	Three Months Ended December 31,												Six months ended December 31,
	2016			Percentage of Net Sales			2015			Percentage of Net Sales			2016			Percentage of Net Sales			2015			Percentage of Net Sales
Gross profit:
Connected Car	$	203,012			26.4	%	$	182,957			24.8	%	$	400,852			25.6	%	$	360,770			24.2	%
Lifestyle Audio		259,528			33.9	%		207,828			32.4	%		460,366			34.5	%		362,102			32.4	%
Professional Solutions		95,515			37.4	%		103,106			41.4	%		189,598			38.2	%		205,511			41.4	%
Connected Services		53,803			31.0	%		52,547			34.2	%		105,605			31.1	%		106,713			34.0	%
Other		(951	)	*				71		*				(1,429	)	*				115		*
Eliminations**		(2,946	)	*				(1,417	)	*				(5,760	)	*				(2,721	)	*
Total	$	607,961			31.2	%	$	545,092			30.8	%	$	1,149,232			31.0	%	$	1,032,490			30.3	%

* Percent not meaningful.

** Represents elimination of inter-segment activity

Connected Car – Gross profit as a percentage of net sales increased 1.6 percentage points to 26.4 percent for the three months ended December 31, 2016 compared to the same period in the prior year. The increase in gross profit as a percentage of net sales was primarily due to the impact of higher sales volume leveraging a more efficient fixed production cost base and favorable product mix.

Gross profit as a percentage of net sales increased 1.4 percentage points to 25.6 percent for the six months ended December 31, 2016 compared to the same period in the prior year. The increase in gross profit as a percentage of net sales was primarily due to the impact of higher sales volume leveraging a more efficient fixed production cost base and favorable product mix.

Lifestyle Audio – Gross profit as a percentage of net sales increased 1.5 percentage points to 33.9 percent for the three months ended December 31, 2016 compared to the same period in the prior year. The increase in gross profit as a percentage of net sales was primarily due to margin expansion in car audio as a result of operating leverage and manufacturing excellence.

Gross profit as a percentage of net sales increased 2.1 percentage points to 34.5 percent for the six months ended December 31, 2016 compared to the same period in the prior year. The increase in gross profit as a percentage of net sales was primarily due to margin expansion in car audio as a result of operating leverage and manufacturing excellence.  

Professional Solutions – Gross profit as a percentage of net sales decreased 4.0 percentage points to 37.4 percent for the three months ended December 31, 2016 compared to the same period in the prior year. The decrease in gross profit as a percentage of net sales was primarily due to unfavorable geographic and product mix.

Gross profit as a percentage of net sales decreased 3.2 percentage points to 38.2 percent for the six months ended December 31, 2016 compared to the same period in the prior year. The decrease in gross profit as a percentage of net sales was primarily due to unfavorable geographic and product mix.

Connected Services – Gross profit as a percentage of net sales decreased 3.2 percentage points to 31.0 percent for the three months ended December 31, 2016 compared to the same period in the prior year. The decrease in gross profit as a percentage of net sales was primarily due to higher revenue on high margin engineering change orders in the prior year.

Gross profit as a percentage of net sales decreased 2.9 percentage points to 31.1 percent for the six months ended December 31, 2016 compared to the same period in the prior year. The decrease in gross profit as a percentage of net sales was primarily due to higher revenue on high margin engineering change orders in the prior year.

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Selling, General and Administrative Expenses

Selling, general and administrative expenses (“SG&A”) were $433.9 million for the three months ended December 31, 2016 compared to $385.9 million in the same period in the prior year, an increase of $48.0 million. As a percentage of net sales, SG&A increased 0.5 percentage points in the three months ended December 31, 2016 compared to the same period in the prior year. The increase in SG&A was primarily in support of increased net sales, higher restructuring expenses, higher RD&E, increased transaction costs, and an increase in a contingent consideration liability related to an acquisition, partially offset by tighter expense controls and favorable foreign currency translation of $2.2 million. RD&E increased $9.0 million to $112.1 million, or 5.8 percent of net sales, in the three months ended December 31, 2016, compared to $103.1 million, or 5.8 percent of net sales, in the same period in the prior year primarily due to higher gross spending to support awarded business, partially offset by favorable foreign currency translation of $0.6 million.

SG&A were $824.4 million for the six months ended December 31, 2016 compared to $741.9 million in the same period in the prior year, an increase of $82.5 million. As a percentage of net sales, SG&A increased 0.4 percentage points in the six months ended December 31, 2016 compared to the same period in the prior year. The increase in SG&A was primarily in support of increased net sales, higher restructuring expenses, higher RD&E, increased transaction costs, and an increase in certain contingent consideration liabilities related to certain acquisitions, partially offset by tighter expense controls and favorable foreign currency translation of $2.2 million. RD&E increased $10.4 million to $221.4 million, or 6.0 percent of net sales, in the six months ended December 31, 2016, compared to $211.0 million, or 6.2 percent of net sales, in the same period in the prior year primarily due to higher gross spending to support awarded business, partially offset by favorable foreign currency translation of $0.3 million.

A summary of SG&A by business segment is presented below:

	Three Months Ended December 31,												Six months ended December 31,
	2016			Percentage of Net Sales			2015			Percentage of Net Sales			2016			Percentage of Net Sales			2015			Percentage of Net Sales
SG&A:
Connected Car	$	126,053			16.4	%	$	98,690			13.4	%	$	228,976			14.6	%		189,285			12.7	%
Lifestyle Audio		133,730			17.5	%		124,811			19.5	%		255,886			19.2	%		231,831			20.7	%
Professional Solutions		85,287			33.4	%		79,155			31.8	%		167,688			33.8	%		155,874			31.4	%
Connected Services		34,175			19.7	%		47,682			31.1	%		84,413			24.8	%		96,217			30.7	%
Other		57,648		*				37,018		*				93,204		*				71,384		*
Eliminations **		(2,946	)	*				(1,417	)	*				(5,760	)	*				(2,721	)	*
Total	$	433,947			22.3	%	$	385,939			21.8	%	$	824,407			22.2	%	$	741,870			21.8	%

* Percent not meaningful.

** Represents elimination of inter-segment activity

Connected Car – SG&A increased $27.4 million to $126.1 million for the three months ended December 31, 2016 compared to the same period in the prior year. The increase in SG&A was primarily in support of increased net sales, higher restructuring expenses, and higher RD&E, partially offset by favorable foreign currency translation of $0.6 million. As a percentage of net sales, SG&A increased 3.0 percentage points to 16.4 percent for the three months ended December 31, 2016 compared to the same period in the prior year. RD&E increased $5.4 million to $50.4 million, or6.6 percent of net sales, in the three months ended December 31, 2016, compared to $45.1 million, or 6.1 percent of net sales, in the same period in the prior year primarily due to higher gross spending to support new awards partially offset by higher customer reimbursements and favorable foreign currency translation of $0.3 million.

SG&A increased $39.7 million to $229.0 million for the six months ended December 31, 2016 compared to the same period in the prior year. The increase in SG&A was primarily in support of increased net sales, higher restructuring expenses, and higher RD&E, partially offset by favorable foreign currency translation of $0.3 million. As a percentage of net sales, SG&A increased 1.9 percentage points to 14.6 percent for the six months ended December 31, 2016 compared to the same period in the prior year. RD&E increased $4.4 million to $98.8 million, or 6.3 percent of net sales, in the six months ended December 31, 2016, compared to $94.3 million, or 6.3 percent of net sales, in the same period in the prior year primarily due to higher gross spending to support new awards partially offset by higher customer reimbursements and favorable foreign currency translation of $0.1 million.

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Lifestyle Audio – SG&A increased $8.9 million to $133.7 million for the three months ended December 31, 2016 compared to the same period in the prior year. The increase in SG&A was primarily in support of increased net sales, including higher RD&E and higher selling and marketing expenses related to our brand identity campaign, partially offset by favorable foreign currency translation of $0.6 million. As a percentage of net sales, SG&A decreased 2.0 percentage point to 17.5 percent for the three months ended December 31, 2016 compared to the same period in the prior year. RD&E increased $7.7 million to $36.1 million, or 4.7 percent of net sales, in the three months ended December 31, 2016 compared to $28.4 million, or 4.4 percent of net sales in the same period in the prior year due to higher gross spending to support awarded business, partially offset by favorable foreign currency translation of $0.1 million.

SG&A increased $24.1 million to $255.9 million for the six months ended December 31, 2016 compared to the same period in the prior year. The increase in SG&A was primarily in support of increased net sales, including higher RD&E and higher selling and marketing expenses related to our brand identity campaign, partially offset by favorable foreign currency translation of $0.3 million. As a percentage of net sales, SG&A decreased 1.5 percentage point to 19.2 percent for the six months ended December 31, 2016 compared to the same period in the prior year. RD&E increased $13.9 million to $70.9 million, or 5.3 percent of net sales, in the six months ended December 31, 2016 compared to $57.1 million, or 5.1 percent of net sales in the same period in the prior year due to higher gross spending to support awarded business, partially offset by favorable foreign currency translation of $0.1 million.

Professional Solutions – SG&A increased $6.1 million to $85.3 million for the three months ended December 31, 2016 compared to the same period in the prior year. The increase in SG&A was primarily due to higher RD&E and an increase in a contingent consideration liability related to an acquisition, partially offset by favorable foreign currency translation of $0.4 million. As a percentage of net sales, SG&A increased 1.6 percentage points to 33.4 percent for the three months ended December 31, 2016 compared to the same period in the prior year. RD&E increased $2.6 million to $19.2 million, or 7.5 percent of net sales, in the three months ended December 31, 2016 compared to $16.5 million, or 6.6 percent of net sales, in the same period in the prior year to support new product introductions.

SG&A increased $11.8 million to $167.7 million for the six months ended December 31, 2016 compared to the same period in the prior year. The increase in SG&A was primarily due to higher restructuring expenses, higher RD&E, and an increase in a contingent consideration liability related to an acquisition, partially offset by tighter cost controls and favorable foreign currency translation of $0.7 million. As a percentage of net sales, SG&A increased 2.4 percentage points to 33.8 percent for the six months ended December 31, 2016 compared to the same period in the prior year. RD&E increased $2.5 million to $36.8 million, or 7.4 percent of net sales, in the six months ended December 31, 2016 compared to $34.3 million, or 6.9 percent of net sales, in the same period in the prior year to support new product introductions.

Connected Services – SG&A decreased $13.5 million to $34.2 million for the three months ended December 31, 2016 compared to the same period in the prior year primarily due to lower amortization of our acquired intangible assets, lower RD&E and favorable foreign currency translation of $0.5 million. As a percentage of net sales, SG&A decreased11.4 percentage points to 19.7 percent for the three months ended December 31, 2016 compared to the same period in the prior year. RD&E decreased $5.9 million to $4.3 million, or 2.5 percent of net sales, in the three months ended December 31, 2016 compared to $10.3 million, or 6.7 percent of net sales, in the same period in the prior year.

SG&A decreased $11.8 million to $84.4 million for the six months ended December 31, 2016 compared to the same period in the prior year primarily due to lower amortization of our acquired intangible assets, lower RD&E and favorable foreign currency translation of $0.9 million, partially offset by an increase in a contingent consideration liability related to an acquisition. As a percentage of net sales, SG&A decreased 5.9 percentage points to 24.8 percent for the six months ended December 31, 2016 compared to the same period in the prior year. RD&E decreased $8.0 million to $11.7 million, or 3.4 percent of net sales, in the six months ended December 31, 2016 compared to $ 19.7 million, or 6.3 percent of net sales, in the same period in the prior year.

Other – Other SG&A includes compensation, benefit and occupancy costs for corporate employees, new technology innovation and expenses associated with our corporate brand identity campaign. Other SG&A increased $20.6 million to $57.7 million in the three months ended December 31, 2016 compared to the same period in the prior year primarily due to increased transaction costs related to the Merger Agreement and increased stock compensation costs.  Other SG&A increased $21.8 million to $93.2 million in the six months ended December 31, 2016 compared to the same period in the prior year primarily due to increased transaction costs related to the Merger Agreement and increased stock compensation costs.  

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Restructuring

Our restructuring program that is designed to improve our global footprint, cost structure, technology portfolio, human resources and internal processes continues. For the three and six months ended December 31, 2016 and 2015, we continued to refine existing programs and launched new programs focused on achieving further productivity improvements to: (i) optimize certain research and development, supply chain and administrative functions; (ii) outsource certain manufacturing capabilities; (iii) divest or sublease facilities no longer needed to support current operations; and (iv) relocate certain functions to best cost countries.  For the six months ended December 31, 2016, the total restructuring liability increased $23.2 million to $47.4 million, compared to June 30, 2016, primarily due to $33.7 million of expenses incurred for new programs or to refine existing programs offset by payments of $9.4 million. Refer to Note 16 – Restructuring Program in the Notes to the Condensed Consolidated Financial Statements for additional information on our restructuring balance.

Goodwill

Goodwill was $1.500 billion at December 31, 2016 compared with $1.510 billion at June 30, 2016. The decrease in goodwill in the six months ended December 31, 2016 versus June 30, 2016 was primarily associated with unfavorable foreign currency translation of $9.7 million and a decrease of $0.1 million in connection with the acquisition of TowerSec Ltd. (“TowerSec”).

Refer to Note 8 - Goodwill and Intangible Assets, Net in the Notes to the Condensed Consolidated Financial Statements for additional information on our goodwill balance.

We did not recognize any goodwill impairment charges in our Condensed Consolidated Statements of Income in the three and six months ended December 31, 2016 and 2015.

Operating Income

Operating income for the three months ended December 31, 2016 was $174.0 million, or 8.9 percent of net sales, compared to operating income of $159.2 million, or 9.0 percent of net sales, in the same period in the prior year. The increase in operating income was primarily due to higher leverage of fixed costs based on higher net sales volumes partially offset by higher SG&A in support of increased net sales, higher restructuring expenses, an increase in transaction costs, and an increase in a contingent consideration liability related to an acquisition.

Operating income for the six months ended December 31, 2016 was $324.8 million, or 8.8 percent of net sales, compared to operating income of $290.6 million, or 8.5 percent of net sales, in the same period in the prior year. The increase in operating income was primarily due to higher leverage of fixed costs based on higher net sales volumes partially offset by higher SG&A in support of increased net sales, higher restructuring expenses, an increase in transaction costs, and an increase in certain contingent consideration liabilities related to certain acquisitions.

Interest Expense, Net

Interest expense is reported net of interest income in our Condensed Consolidated Statements of Income. Interest expense, net was $9.2 million and $7.7 million for the three months ended December 31, 2016 and 2015, respectively. Gross interest expense was $10.1 million and $8.6 million for the three months ended December 31, 2016 and 2015, respectively. The non-cash portion of gross interest expense was $0.9 million and $0.7 million for the three months ended December 31, 2016 and 2015, respectively. The cash portion of gross interest expense was $9.2 million and $7.9 million for the three months ended December 31, 2016 and 2015, respectively. Interest income was $0.9 million for the three month periods ended December 31, 2016 and 2015.

Interest expense, net was $18.5 million and $15.9 million for the six months ended December 31, 2016 and 2015, respectively. Gross interest expense was $20.3 million and $17.4 million for the six months ended December 31, 2016 and 2015, respectively. The non-cash portion of gross interest expense was $1.9 million and $1.4 million for the six months ended December 31, 2016 and 2015, respectively. The cash portion of gross interest expense was $18.4 million and $16.0 million for the six months ended December 31, 2016 and 2015, respectively. Interest income was $1.8 million and $1.5 million for the six months ended December 31, 2016 and 2015, respectively.

Non-cash interest expense for the three and six months ended December 31, 2016 relates to the amortization of the debt discount and debt issuance costs on the Euro denominated 2.000 Percent Senior Notes due 2022 (the “2.000 Percent Senior Notes”) issued on May 27, 2015 and the U.S. Dollar denominated 4.150 Percent Senior Notes due 2025 (the “4.150 Percent Senior Notes”) issued on May 11, 2015, the amortization of debt issuance costs on the Multi-Currency Credit Agreement entered into on March 26, 2015 by and among Harman, Harman Holding GmbH & Co. KG (“Harman KG”) and a group of banks (the “2015 Credit Agreement”), and the accretion of the innovative Systems GmbH obligation.  

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Non-cash interest expense for the three and six months ended December 31, 2015 relates to the amortization of the debt discount and debt issuance costs on the 2.000 Percent Senior Notes and the 4.150 Percent Senior Notes and the amortization of debt issuance costs on the 2015 Credit Agreement.

Cash interest expense for the three and six months ended December 31, 2016 and 2015 primarily relates to interest on the 2.000 Percent Senior Notes, the 4.150 Percent Senior Notes, the 2015 Credit Agreement, and our short term borrowings.

Interest income primarily relates to interest earned on our cash and cash equivalents and the variances from year to year are due to fluctuations in those balances and changes in interest rates.

Foreign Exchange Losses (Gains), Net

Foreign currency exchange gains and losses resulting from the remeasurement of certain foreign currency denominated monetary assets and liabilities are included in Foreign exchange losses (gains), net in our Condensed Consolidated Statements of Income.

Miscellaneous, Net

Miscellaneous, net expenses were $1.9 million and $4.4 million for the three months ended December 31, 2016 and 2015, respectively, and were $4.8 million and $8.4 million for the six months ended December 31, 2016 and 2015, respectively. During the three and six months ended December 31, 2016, Miscellaneous, net expenses primarily consisted of bank charges.  During three and six months ended December 31, 2015, Miscellaneous, net expenses primarily consisted of bank charges, interest expense related to a disputed claim and accretion of certain acquisition consideration liabilities which are payable in the future.  

Income Tax Expense, Net

Our provision for income taxes is based on an estimated annual tax rate for the year applied to federal, state and foreign income. Income tax expense for the three months ended December 31, 2016 and 2015 was $60.9 million and $33.1 million, respectively. The effective tax rate for the three months ended December 31, 2016 and 2015 was 37.9 percent and 22.6 percent, respectively. The increase in the effective tax rate for the three months ended December 31, 2016, compared to the same period in the prior year was primarily due a discrete tax charge of $22.7 million from deemed income on foreign earnings of which $3.7 million, $17.1 million and $1.9 million is attributable to fiscal years 2014, 2015 and 2016, respectively.

Income tax expense for the six months ended December 31, 2016 and 2015 was $98.3 million and $66.6 million, respectively. The effective tax rate for the six months ended December 31, 2016 and 2015 was 32.8 percent and 24.9 percent, respectively. The increase in the effective tax rate for the six months ended December 31, 2016, compared to the same period in the prior year was primarily due to a discrete tax charge of $22.7 million from deemed income on foreign earnings of which $3.7 million, $17.1 million and $1.9 million is attributable to fiscal years 2014, 2015 and 2016, respectively.

We have net deferred tax assets of $106.5 million primarily consisting of deferred deductions, interest and loss carryovers and research and experimentation credits. We have evaluated all available evidence, both positive and negative, and based upon such evidence we continue to believe that our net deferred tax assets are fairly reflected in our Condensed Consolidated Balance Sheets. If the results of our operations do not meet our current expectations, our net deferred tax assets may become impaired.

As of December 31, 2016 unrecognized tax benefits and the related interest were $65.6 million and $3.0 million, respectively, all of which would affect the tax rate if recognized. During the three months ended December 31, 2016, tax reserves decreased by $0.1 million primarily due to foreign currency translation that is recorded in the Condensed Consolidated Statements of Comprehensive Income. Related interest on prior year exposures was increased by $0.1 million. During the six months ended December 31, 2016, $0.3 million of tax reserves were established on new uncertain tax positions. Related interest on prior year exposures was increased by $0.2 million.

Financial Condition

Liquidity and Capital Resources

We primarily finance our working capital requirements through cash generated by operations, the 2015 Credit Agreement, and trade credit. Cash and cash equivalents were $683.4 million at December 31, 2016 compared to $602.3 million at June 30, 2016. During the six months ended December 31, 2016, our cash and cash equivalents balance increased $81.1 million. The increase in cash was due to net cash provided by operating activities, partially offset by payments related to capital expenditures, repurchases of common stock under our board authorized share buyback programs and related to our share-based compensation arrangements, dividends, payment of

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contingent consideration, and the purchase of a convertible debt security. We also used cash to make investments in our manufacturing facilities, fund product development and meet the working capital needs of our business segments.

At December 31, 2016 and June 30, 2016, there was approximately $513.0 million and $523.0 million, respectively, of outstanding borrowings, which are included in our Condensed Consolidated Balance Sheets as Borrowings under the 2015 Credit Agreement. At December 31, 2016 and June 30, 2016 there were $4.1 million of outstanding letters of credit under the 2015 Credit Agreement. At December 31, 2016 and June 30, 2016, unused available credit under the 2015 Credit Agreement was $682.9 million and $672.9 million, respectively. In connection with the 2015 Credit Agreement, we incurred $3.0 million of fees and other expenses, which are being amortized over the term of the 2015 Credit Agreement to Interest expense, net in our Condensed Consolidated Statements of Income on a straight-line basis.

The 2015 Credit Agreement and each of the indentures underlying the 2.000 Percent Senior Notes and the 4.150 Percent Senior Notes contain provisions that limit our operating and financing activities. A violation of any of these covenants could result in a default under our debt agreements, which could permit the acceleration of the repayment of any borrowings outstanding and/or the holders of the notes to direct the trustee to accelerate repayment of amounts outstanding under the notes. A default or acceleration under our debt agreements would result in increased capital costs and could adversely affect our ability to operate our business and our results of operations and financial condition. As of December 31, 2016, we were in compliance with all of the covenants contained in the 2015 Credit Agreement and each of the indentures underlying the 2.000 Percent Senior Notes and the 4.150 Percent Senior Notes.

We believe that our existing cash and cash equivalents of $683.4 million at December 31, 2016, together with our expected future operating cash flows, and our availability of $682.9 million under the 2015 Credit Agreement, will be sufficient to cover our working capital needs, debt service, income tax payments, capital expenditures, including major investments related to manufacturing and research facilities in emerging markets, acquisitions, purchase commitments, restructuring projects, share buybacks and quarterly dividends for at least the next 12 months.

Our ability to maintain positive liquidity going forward depends on our ability to continue to generate cash from operations and maintain access to the financial markets, both of which are subject to general economic, financial, competitive, legislative, regulatory and other market factors beyond our control. We earn a significant amount of our operating income outside the U.S., the majority of which is deemed to be permanently reinvested in foreign jurisdictions. As of December 31, 2016, Cash and cash equivalents of $119.9 million were held in the U.S. and Cash and cash equivalents of $563.5 million were held by us in foreign jurisdictions. As of June 30, 2016, Cash and cash equivalents of $164.7 million were held in the U.S. and Cash and cash equivalents of $437.6 million were held by us in foreign jurisdictions. Below is a more detailed discussion of our cash flow activities during the six months ended December 31, 2016 compared to the same period in the prior fiscal year.

Operating Activities

For the six months ended December 31, 2016, our net cash provided by operations was $310.5 million compared to $19.8 million in the same period in the prior year. The increase in operating cash flows compared to the same period in the prior year was primarily due to increases in accounts payable, smaller increases in inventory balances, increases in income taxes payable, higher net income partially offset by increases in receivables. At December 31, 2016, working capital, excluding cash and short-term debt, was $615.0 million, compared with $571.0 million at June 30, 2016. The increase was primarily due to higher inventory, receivables and other current assets, partially offset by higher accounts payable, and accrued liabilities.

Investing Activities

Net cash used in investing activities was $87.3 million for the six months ended December 31, 2016, compared to $86.9 million in the same period in the prior year. The increase in net cash used in investing activities compared to the same period in the prior year was primarily due to our acquisition of a convertible debt security, partially offset by decreased capital expenditures. Capital expenditures for the six months ended December 31, 2016 were $71.1 million, in support of new Connected Car and Lifestyle Audio automotive awards, compared to $87.4 million for the same period in the prior year.  

Financing Activities

Net cash used in financing activities was $129.1 million for the six months ended December 31, 2016, compared to $133.1 million in the same period in the prior year. The decrease in cash used in financing activities was primarily due to the excess tax benefits for share-based compensation and a decrease in net repayments of long-term debt, partially offset by increased contingent consideration payments. Refer to Note 9- Debt in the Notes to the Condensed Consolidated Financial Statements for additional information on our financing activities and material debt obligations including our 2.000 Percent Senior Notes, 4.150 Percent Senior Notes, and the 2015 Credit Agreement.

44

Equity

Total shareholders’ equity at December 31, 2016 was $2.576 billion compared with $2.452 billion at June 30, 2016. The increase is primarily due to higher net income and the excess tax benefits from share-based compensation, offset by treasury stock repurchases and dividends to shareholders.

Off-Balance Sheet Arrangements

We utilize off-balance sheet arrangements in our operations when we enter into operating leases for land, buildings and equipment in the normal course of business, which are not included in our Condensed Consolidated Balance Sheets. In addition, we had outstanding letters of credit of $4.1 million at December 31, 2016 and June 30, 2016 which were not included in our Condensed Consolidated Balance Sheets.

Share Buyback Program

During the three months ended December 31, 2016 and 2015, we repurchased 241,357 shares at a cost of $20.0 million and 123,850 shares at a cost of $12.9 million, respectively. During the six months ended December 31, 2016 and 2015, we repurchased 692,789 shares at a cost of $55.2 million and 494,550 shares at a cost of $50.0 million, respectively, for a total cumulative buyback of 2,324,537 shares at a cost of $195.2 million under the board approved buyback program which is currently suspended pursuant to the Merger Agreement. Refer to Note 11- Shareholders’ Equity in the Notes to the Condensed Consolidated Financial Statements for additional information on our share buyback program.

Business Outlook

Our future outlook is largely dependent upon global macroeconomic conditions and global automotive production. We believe that our innovative portfolio of consumer audio products and effective deployment of marketing campaigns will continue to drive growth rates above the industry average. Within our automotive based businesses, we expect existing and new customers will continue to award new business in excess of current period revenue supporting our long term growth outlook. Results in our Professional Solutions segment remain negatively impacted by sales channel rationalizations to support our new solutions based go-to-market structure. To mitigate these impacts we continue to launch new innovative products and are focusing our attention on completing the re-alignment of our sales structure to better capitalize on our unique end-to-end solutions. Connected Services provides diversification of our customer base and moderation of our business cycle. We remain committed to our investment plans in the areas of RD&E and marketing programs, driving growth through increased consumer awareness for our innovative new product introductions. We also remain committed to pursuing incremental productivity and restructuring programs. We continue to expect that capital expenditures as a percentage of net sales for fiscal year 2017 will remain in line with fiscal year 2016 levels.

Subsequent Events

Dividend Declaration

On January 26, 2017 we declared a cash dividend of $0.35 per share for the quarter ended December 31, 2016. The quarterly dividend will be paid on February 22, 2017 to each stockholder of record as of the close of business on February 6, 2017.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are required to include information about potential effects of changes in interest rates and currency exchange rates in our periodic reports filed with the Securities and Exchange Commission. Since June 30, 2016, there have been no material changes in the quantitative or qualitative aspects of our market risk profile. See Item 7A, Quantitative and Qualitative Disclosure About Market Risk included in our 2016 Annual Report.

Interest Rate Sensitivity/Risk

At December 31, 2016, interest on approximately 38 percent of our borrowings was determined on a variable rate basis. The interest rates on the balances of our debt, cash and cash equivalents are subject to changes in U.S. and European short-term interest rates. To assess exposure to interest rate changes, we have performed a sensitivity analysis assuming a hypothetical 100 basis point increase or decrease in interest rates across all outstanding variable rate debt and investments. Our analysis indicates that the effect on net income for the three months ended December 31, 2016 of such an increase or decrease in interest rates would be approximately $0.7 million.

45

Foreign Currency Risk

Significant amounts of our net sales result from our operations in Germany, Hungary, China, the Netherlands, and the United Kingdom. As a result, we are subject to market risks arising from changes in these foreign currency exchange rates, principally the change in the value of the Euro versus the U.S. Dollar. Refer to Note 13 – Derivatives in the Notes to the Condensed Consolidated Financial Statements for additional discussion on our financial risk management. Changes in currency exchange rates, principally the change in the value of the Euro compared to the U.S. Dollar have an impact on our reported results when the financial statements of foreign subsidiaries are translated into U.S. Dollars. Approximately 37 percent of our sales are denominated in Euros. The average exchange rate for the Euro versus the U.S. Dollar for the six months ended December 31, 2016 decreased 6 percent from the same period in the prior fiscal year.

We presently estimate the effect on fiscal year 2017 income before income taxes, based upon a recent estimate of foreign exchange translation exposure (translating the operating performance of our foreign subsidiaries into U.S. Dollars), of a uniform strengthening or weakening of the U.S. Dollar by 10 percent, would be to increase or decrease income before income taxes by approximately $11.3 million for the six months ended December 31, 2016.

Competitive conditions in the markets in which we operate may limit our ability to increase prices in the event of adverse changes in currency exchange rates. For example, certain products made in Europe are sold in the U.S. Sales of these products are affected by the value of the U.S. Dollar relative to the Euro. Any weakening of the U.S. Dollar could depress the demand for these European manufactured products in the U.S. and reduce sales. However, due to the multiple currencies involved in our business and the netting effect of various simultaneous transactions, our foreign currency positions are partially offsetting. In addition, our foreign currency hedging program is designed to limit our exposure.

Actual gains and losses in the future may differ materially from the hypothetical gains and losses discussed above based on changes in the timing and amount of interest rate and foreign currency exchange rate movements and our actual exposure and hedging transactions.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated by the Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934, as amended (the “1934 Act”)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the 1934 Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms. We note that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving our stated goals under all potential future conditions.

Interpretive guidance issued by the SEC staff permits the exclusion of an evaluation of the effectiveness of a registrant’s disclosure controls and procedures as they relate to the internal control over financial reporting for acquired businesses during the first year following such acquisition. As discussed in Note 2 - Acquisitions in the Notes to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended June 30, 2016 and in Note 22 – Acquisitions in the Notes to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q, during the fiscal year ended June 30, 2016, we completed the acquisition of TowerSec Ltd. (the “Acquired Business”). The Acquired Business had total assets representing one percent of consolidated assets, and total revenues representing less than one percent of consolidated revenues included in our condensed consolidated financial statements as of and for the three and six months ended December 31, 2016. Management’s evaluation and conclusion as to the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q excludes any evaluation of the internal control over financial reporting of the Acquired Business.

Changes in Internal Control Over Financial Reporting.

As a result of the acquisition of the Acquired Business, we have begun to integrate certain business processes and systems of the Acquired Business.

There have been no other changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) as promulgated by the SEC under the 1934 Act) during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

46

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Certain legal proceedings in which we are involved are discussed in Part I, Item 3 of our 2016 Annual Report on Form 10-K.

There have been no material changes to the disclosure regarding the legal proceedings set forth in Part I, Item 3 to our 2016 Annual Report.

Item 1A. Risk Factors

The following risk factors update the disclosure set forth in Item 1A to our 2016 Annual Report:

We announced on November 14, 2016 that we have entered into a definitive agreement to be acquired by Samsung Electronics Co., Ltd.  We expect the transaction to close in mid-2017.  Our operating results may be adversely affected by the pendency of the transaction, and a failure to consummate the transaction could have an adverse effect on the share price of our common stock.

On November 14, 2016, we announced that we have entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Samsung Electronics Co., Ltd., a Korean corporation (“Samsung”), Samsung Electronics America, Inc., a New York corporation and wholly owned subsidiary of Samsung, and Silk Delaware, Inc., a Delaware corporation and wholly owned subsidiary of Samsung USA (“Merger Sub”), pursuant to which Merger Sub will be merged with and into Harman  (the “Merger”), with Harman continuing as the surviving corporation and an indirect wholly owned subsidiary of Samsung.  The Merger is subject to the terms and conditions of the Merger Agreement and creates various risks that could negatively impact our operating results or the price of our common stock, including the following:

• the Merger may not be consummated on the expected timeframe or at all if we fail to obtain the requisite adoption of the Merger Agreement by our stockholders, or if the parties to the Merger Agreement fail to obtain necessary regulatory approvals or satisfy other closing conditions contemplated by the Merger Agreement, some of which are outside of our control;

• the disruption of management’s and employees’ attention to ongoing business activities due to the pending Merger;

• the potential adverse effect of the pending Merger on our ability to attract, retain and motivate key employees who may be uncertain about their future roles within Harman following the completion of the Merger;

• the potential adverse impact on our ability to maintain current relationships or establish relationships with vendors, suppliers and other business partners;

• restrictions imposed on our business and operations pursuant to certain interim operating covenants in the Merger Agreement may prevent us from pursuing certain business opportunities or taking certain actions with respect to the business and financial affairs of Harman without Samsung’s consent;

• we may forego certain business opportunities that we might otherwise pursue absent the pending Merger; and

• if the Merger is not consummated, we may be required to pay a termination fee under certain circumstances as provided in the Merger Agreement.

If the Merger is not consummated, and there are no other parties willing and able to acquire Harman at a price of $112.00 per share or higher on terms acceptable to us, our share price will likely decline, as our common stock has recently traded at prices linked to the proposed per share consideration for the Merger.  

Additionally, we have incurred, and will continue to incur throughout the pendency of the Merger, certain costs, expenses and fees for professional services and other transaction costs in connection with the proposed Merger, for which we will have received little or no benefit if the Merger is not completed.  Many of these fees and costs will be payable by us even if the Merger is not completed and may relate to activities that we would not have undertaken other than to complete the Merger.

We filed a proxy statement with the SEC on January 17, 2017 in anticipation of the special meeting of our stockholders to be held in connection with the proposed Merger, at which our stockholders will be asked to approve, among other matters, the adoption of the Merger Agreement.  Adoption of the Merger Agreement by the requisite vote of our stockholders (as further described in the proxy statement) is a condition to the completion of the Merger.  The proxy statement contains a summary of the Merger Agreement, the matters to be voted on at the special meeting of our stockholders and other relevant matters with respect to the proposed Merger.  We urge our stockholders to read the proxy statement and the other relevant materials in their entirety because they contain important information about the proposed Merger.

47

The Merger Agreement contains provisions that could discourage or make it difficult for a third party to acquire us prior to the completion of the proposed Merger.

The Merger Agreement contains provisions that significantly restrict our ability to entertain a third-party acquisition proposal during the pendency of the Merger.  These provisions include a general prohibition on soliciting or engaging in discussions or negotiations regarding any alternative acquisition proposal, subject to certain exceptions, and require that we pay atermination fee of $240 million if the Merger Agreement is terminated in specified circumstances, such as because our board of directors changes its recommendation to our stockholders to vote in favor of the Merger.  For further details, see the sections of the proxy statement we filed with the SEC on January 17, 2017 entitled “The Merger Agreement—Other Covenants and Agreement—No Solicitation” and “—Company Termination Fee.”  These provisions might discourage an otherwise-interested third party from considering or proposing an acquisition transaction, even one that may be deemed of greater value to our stockholders than the proposed Merger.  Furthermore, even if a third party elects to propose an acquisition, the requirement on our part to pay a termination fee may result in that third party offering a lower value to our stockholders than such third party might otherwise have offered.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Share Repurchases

On October 28, 2014, our Board of Directors authorized the repurchase of up to $500.0 million of our common stock over a three year period (the “2014 Buyback Program”). The 2014 Buyback Program allows us to purchase shares of our common stock in accordance with applicable securities laws on the open market or through privately negotiated transactions during the authorized three year period. Pursuant to the Merger Agreement, the 2014 Buyback Program has been suspended. In the event that the 2014 Buyback Program resumes, we will determine the timing and the amount of any repurchases based on an evaluation of market conditions, share price, other growth opportunities and other factors. We have and may, if the 2014 Buyback Program resumes, repurchase shares on the open market or, from time to time, through repurchase plans with one or more external brokers that provide a structure for execution of share repurchases under the 2014 Buyback Program. During the three months ended December 31, 2016 and 2015, we repurchased 241,357shares at a cost of $20.0 million and 123,850 shares at a cost of $12.9 million, respectively. During the six months ended December 31, 2016 and 2015 we repurchased 692,789shares at a cost of $55.2 million and 494,550 shares at a cost of $50.0 million, respectively, for a total cumulative buyback of 2,324,537shares at a cost of $195.2 million under the 2014 Buyback Program:

	Total Number of Shares Acquired During Period		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Dollar Amount of Shares That May Yet Be Purchased Under the Program
October 1 –October 31, 2016		241,357		82.86		241,357		304,801,555
November 1 – November 30, 2016		-		-		-		304,801,555
December 1– December 31, 2016		-		-		-		304,801,555
Total		241,357				241,357		304,801,555

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

48

Item 6. Exhibits

Exhibit No.	Exhibit Description
2.1	Agreement and Plan of Merger, dated as of November 14, 2016, by and among Harman International Industries, Incorporated, Samsung Electronics Co., Ltd., Samsung Electronics America, Inc. and Silk Delaware, Inc. (Filed as Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC on November 14, 2016 and hereby incorporated by reference). †
3.1	Certificate of Amendment to the Restated Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on December 7, 2016 (Filed as Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on December 9, 2016 and hereby incorporated by reference).
3.2	By-Laws of Harman International Industries, Incorporated, as amended, dated December 7, 2016 (Filed as Exhibit 3.2 to the Current Report on Form 8-K filed with the SEC on December 9, 2016 and hereby incorporated by reference).
10.1	Letter Agreement, dated as of December 16, 2016, by and between Harman International Industries, Incorporated and Sandra E. Rowland (Filed as Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on December 19, 2016 and hereby incorporated by reference).*
10.2	Letter Agreement, dated as of December 16, 2016, by and between Harman International Industries, Incorporated and Phillip Eyler (Filed as Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on December 19, 2016 and hereby incorporated by reference).*
31.1	Certification of Dinesh C. Paliwal pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Sandra E. Rowland pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Dinesh C. Paliwal and Sandra E. Rowland, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF	XBRL Taxonomy Extension Definition Linkbase.
101.LAB	XBRL Taxonomy Extension Label Linkbase.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.

† Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish supplementally copies of any of the omitted schedules or exhibits upon request by the SEC.

* Management contract, compensatory plan or arrangement.

Attached as Exhibit 101 to this report are the following financial information formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at December 31, 2016 and June 30, 2016, (ii) Condensed Consolidated Statements of Income for the three and six months ended December 31, 2016 and 2015, (iii) Condensed Consolidated Statements of Comprehensive Income for the three and six months ended December 31, 2016 and 2015, (iv) Condensed Consolidated Statements of Cash Flows for the six months ended December 31, 2016 and 2015 and (v) Notes to the Condensed Consolidated Financial Statements.

49

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, Harman International Industries, Incorporated has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Harman International Industries, Incorporated
Date: January 26, 2017	By:	/S/ SANDRA E. ROWLAND
		Sandra E. Rowland
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

50

EX-31.1

Exhibit 31.1

PRINCIPAL EXECUTIVE OFFICER’S CERTIFICATION

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Dinesh C. Paliwal, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Harman International Industries, Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 26, 2017	/S/ DINESH C. PALIWAL
	Dinesh C. Paliwal
	Chairman, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

PRINCIPAL FINANCIAL OFFICER’S CERTIFICATION

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Sandra E. Rowland, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Harman International Industries, Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 26, 2017	/S/ Sandra E. Rowland
	Sandra E. Rowland
	Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. § 1350, as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Harman International Industries, Incorporated (the “Company”) for the period ended December 31, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:

1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

Date: January 26, 2017

/S/ DINESH C. PALIWAL
Name:	Dinesh C. Paliwal
Title:	Chairman, President and Chief Executive Officer (Principal Executive Officer)
/S/ SANDRA E. ROWLAND
Name:	Sandra E. Rowland
Title:	Executive Vice President and Chief Financial Officer (Principal Financial Officer)

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document. This certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates it by reference.

XML

Document and Entity Information - shares	6 Months Ended
	Dec. 31, 2016	Jan. 24, 2017
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Dec. 31, 2016
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Trading Symbol	HAR
Entity Registrant Name	HARMAN INTERNATIONAL INDUSTRIES INC /DE/
Entity Central Index Key	0000800459
Current Fiscal Year End Date	--06-30
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		69,893,450

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2016	Jun. 30, 2016
Current assets
Cash and cash equivalents	$ 683,351	$ 602,300
Receivables, net	1,195,761	1,122,920
Inventories	787,559	706,084
Other current assets	584,653	487,151
Total current assets	3,251,324	2,918,455
Property, plant and equipment, net	579,039	593,290
Intangible assets, net	435,930	476,284
Goodwill	1,500,499	1,510,279
Deferred tax assets, net	131,681	140,181
Other assets	433,150	409,380
Total assets	6,331,623	6,047,869
Current liabilities
Current portion of long-term debt	55,543	86,641
Short-term debt	2,832	0
Accounts payable	1,001,822	867,279
Accrued liabilities	724,759	670,746
Accrued warranties	185,656	178,367
Income taxes payable	40,762	28,773
Total current liabilities	2,011,374	1,831,806
Borrowings under revolving credit facility	513,000	523,000
Long-term debt	766,601	787,333
Pension liability	210,471	216,016
Other non-current liabilities	253,718	237,241
Total liabilities	3,755,164	3,595,396
Commitments and contingencies
Preferred stock
Common stock	1,017	1,012
Additional paid-in capital	1,460,686	1,410,765
Accumulated other comprehensive income	(100,930)	(77,241)
Retained earnings	2,643,487	2,490,570
Less: Common stock held in treasury	(1,427,801)	(1,372,633)
Total equity	2,576,459	2,452,473
Total liabilities and equity	$ 6,331,623	$ 6,047,869

XML

Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Income Statement [Abstract]
Net sales	$ 1,947,474	$ 1,772,157	$ 3,706,996	$ 3,403,045
Cost of sales	1,339,513	1,227,065	2,557,764	2,370,555
Gross profit	607,961	545,092	1,149,232	1,032,490
Selling, general and administrative expenses	433,947	385,939	824,407	741,870
Operating income	174,014	159,153	324,825	290,620
Other expenses:
Interest expense, net	9,214	7,666	18,538	15,925
Foreign exchange losses (gains), net	2,365	887	1,398	(958)
Miscellaneous, net	1,916	4,363	4,811	8,350
Income before income taxes	160,519	146,237	300,078	267,303
Income tax expense, net	60,865	33,050	98,288	66,600
Equity in loss (income) of unconsolidated subsidiaries	205		(776)
Net income	99,449	113,187	202,566	200,703
Net income attributable to non-controlling interest		289		707
Net income attributable to Harman International Industries, Incorporated	$ 99,449	$ 112,898	$ 202,566	$ 199,996
Earnings per share:
Basic	$ 1.40	$ 1.57	$ 2.86	$ 2.78
Diluted	$ 1.39	$ 1.55	$ 2.83	$ 2.76
Weighted average shares outstanding:
Basic	70,986	72,079	70,938	72,060
Diluted	71,712	72,830	71,510	72,549

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Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Statement Of Income And Comprehensive Income [Abstract]
Net income		$ 99,449	$ 113,187	$ 202,566	$ 200,703
Net income attributable to non-controlling interest			289		707
Net income attributable to Harman International Industries, Incorporated		99,449	112,898	202,566	199,996
Other comprehensive loss, net of taxes:
Foreign currency translation	[1]	(46,751)	(19,924)	(43,360)	(53,247)
Change in hedging derivatives, net of taxes	[1]	33,447	16,301	15,648	6,718
Pension liability adjustment, net of taxes	[1]	3,010	2,018	3,475	1,335
Unrealized (losses) gains on available for sale securities	[1]	(468)	34	548	(51)
Other comprehensive loss, net of taxes attributable to Harman International Industries, Incorporated	[1]	(10,762)	(1,571)	(23,689)	(45,245)
Comprehensive income, net of taxes		88,687	111,616	178,877	155,458
Comprehensive income, net of taxes attributable to non-controlling interest			289		707
Comprehensive income, net of taxes attributable to Harman International Industries, Incorporated		$ 88,687	$ 111,327	$ 178,877	$ 154,751

[1] Refer to Note 15 – Other Comprehensive Income (Loss) for more information.

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Cash flows from operating activities:
Net income	$ 202,566	$ 200,703
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	103,780	114,837
Deferred income taxes	3,918	30,519
Loss on disposition of assets	1,093	471
Share-based compensation	30,058	20,941
Excess tax benefit from share-based compensation	(27,309)	(1,958)
Non-cash interest expense	1,885	1,396
Non-cash increase in contingent consideration	15,332	913
(Increase) decrease in:
Receivables, net	(99,556)	(32,576)
Inventories	(98,686)	(197,836)
Other current assets	(60,033)	(38,602)
Pre-production and development costs	(11,306)	(33,266)
Increase (decrease) in:
Accounts payable	158,764	(21,130)
Accrued warranties	15,432	4,819
Accrued other liabilities	60,039	39,714
Income taxes payable	17,918	(50,711)
Net change in derivative assets and liabilities	(14,478)	(11,320)
Other operating activities	11,100	(7,143)
Net cash provided by operating activities	310,517	19,771
Cash flows from investing activities:
Acquisitions, net of cash received	(1,385)	(619)
Capital expenditures	(71,071)	(87,352)
Proceeds from asset dispositions	2,703	50
Purchase of convertible debt security	(15,000)
Other items, net	(2,511)	1,042
Net cash used in investing activities	(87,264)	(86,879)
Cash flows from financing activities:
Increase in short-term borrowings	2,788	340
Borrowings of long-term debt	80,000
Repayments of long-term debt	(91,193)	(26,259)
Cash dividends to shareholders	(49,815)	(50,172)
Repurchase of common stock	(55,168)	(50,009)
Exercise of stock options	7,489	5,527
Repurchases related to share-based compensation arrangements	(14,930)	(11,861)
Excess tax benefit from share-based compensation	27,309	1,958
Payment of contingent consideration	(30,170)	(327)
Other items, net	(5,446)	(2,310)
Net cash used in financing activities	(129,136)	(133,113)
Effect of exchange rate changes on cash	(13,066)	(11,756)
Net increase in cash and cash equivalents	81,051	(211,977)
Cash and cash equivalents at beginning of period	602,300	649,513
Cash and cash equivalents at end of period	683,351	437,536
Supplemental disclosure of cash flow information:
Interest paid, net	12,881	10,736
Income taxes paid	$ 78,047	$ 45,851

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Basis of Presentation

6 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Basis of Presentation

Note 1 – Basis of Presentation

Basis of Presentation

References to “we,” “us,” “our,” the “company” and “Harman” refer to Harman International Industries, Incorporated and its consolidated subsidiaries unless the context specifically requires otherwise.

Our unaudited, condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. These unaudited condensed consolidated financial statements have been prepared in accordance with the accounting policies described in our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2016 (our “2016 Annual Report”) and do not include all information and footnote disclosures included in our audited financial statements. In the opinion of management, the accompanying unaudited, condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments and accruals, necessary to present fairly, in all material respects, the consolidated financial condition, results of operations and cash flows for the periods presented. Operating results for the three and six months ended December 31, 2016 are not necessarily indicative of the results that may be expected for the full fiscal year ending June 30, 2017 due to seasonal, economic and other factors. Where necessary, information for prior periods has been reclassified to conform to the condensed consolidated financial statement presentation in the current fiscal year. These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes included in our 2016 Annual Report.

Effective July 1, 2016, we revised our business segments in order to better align them with our strategic approach to the markets and customers we serve. Refer to Note 18 – Business Segment Data for more information. Prior period segment amounts throughout the Notes to the Condensed Consolidated Financial Statements have been reclassified to the new segment structure. The reclassification of historical business segment information had no impact on our basic financial statements.

The methods, estimates and judgments we use in applying our accounting policies, in conformity with generally accepted accounting principles in the United States (“GAAP”), have a significant impact on the results we report in our financial statements. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. The estimates affect the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.

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New Accounting Standards

6 Months Ended

Dec. 31, 2016

Accounting Changes And Error Corrections [Abstract]

New Accounting Standards

Note 2 – New Accounting Standards

Recently Adopted Accounting Standards

Imputation of Interest: In August 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-15, “Interest – Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements,” which clarifies the presentation and subsequent measurement of debt issuance costs associated with lines of credit. Under the new guidance, these costs may be presented as an asset and amortized ratably over the term of the line-of-credit arrangement, regardless of whether there are outstanding borrowings on the arrangement. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued. We adopted the provisions of this new guidance on July 1, 2016 on a retrospective basis. The adoption of the new provisions did not have any impact on our financial condition or results of operations.

In April 2015, the FASB issued ASU No. 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs,” which changes the presentation requirements for debt issuance costs and debt discount and premium. The new guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the new guidance. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued. We adopted the provisions of this new guidance on July 1, 2016 on a retrospective basis. The adoption of the new provisions resulted in a reclassification of $6.2 million which reduced both Other assets and Long-term debt in our Condensed Consolidated Balance Sheets. The adoption of the new provision did not have any impact on our results of operations.

Extraordinary Items: In January 2015, the FASB issued ASU 2015-01, “Income Statement – Extraordinary and Unusual Items (Subtopic 225-20),” which eliminates the concept of extraordinary items. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2015. The new guidance is to be applied prospectively but may also be applied retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. We adopted the provisions of this new guidance on July 1, 2016. The adoption of the new provisions did not have any impact on our financial condition or results of operations.

Recently Issued Accounting Standards

Business Combinations: In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2017. Early adoption is permitted for financial statements that have not been previously issued. We expect to adopt the provisions of this new guidance on July 1, 2018. The provisions in this guidance will be applied on a prospective basis. We do not expect the adoption of the new provisions to have a material impact on our financial condition or results of operations.

Income Taxes: In October 2016, the FASB issued ASU No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory,” which requires the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2017. Early adoption is permitted for financial statements that have not been previously issued. We expect to adopt the provisions of this new guidance on July 1, 2018. The provisions in this guidance will be applied on a modified retrospective basis. We are currently assessing the impact the adoption of the new provisions will have on our financial condition and results of operations.

Cash Flows: In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash" which clarifies the guidance on the classification and presentation of restricted cash in the statement of cash flows. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2017. Early adoption is permitted for financial statements that have not been previously issued. We expect to adopt the provisions of this new guidance on July 1, 2018. The provisions in this guidance will be applied on a retrospective basis. We do not expect the adoption of the new provisions to have a material impact on our statement of cash flows.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows: Clarification of Certain Cash Receipts and Cash Payments,” which eliminates the diversity in practice related to the classification of certain cash receipts and payments in the statement of cash flows, by adding or clarifying guidance on eight specific cash flow issues. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2017. Early adoption is permitted for financial statements that have not been previously issued. We expect to adopt the provisions of this new guidance on July 1, 2018. The provisions in this guidance will be applied on a retrospective basis. We are currently assessing the impact the adoption of the new provisions will have on our statement of cash flows.

Share-Based Payments: In March 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” which simplifies how share-based payments are accounted for and presented in the consolidated financial statements. The guidance amends certain income tax consequences for share-based payments, the accounting for forfeitures, the classification of share-based awards, and the classification of share-based payments in the statement of cash flows.  The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2016. Early adoption is permitted for financial statements that have not been previously issued. We expect to adopt the provisions of this new guidance on July 1, 2017. The provisions in this guidance will be applied on a prospective basis. We are currently assessing the impact the adoption of the new provisions will have on our financial condition and results of operations.

Derivatives: In March 2016, the FASB issued ASU No. 2016-05, “Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships,” which clarifies existing guidance on the designation of hedging instruments. Under the new guidance, a change in the counterparty to a derivative instrument that has been designated as a hedging instrument would not require dedesignation of that hedging relationship, provided that all other hedge accounting criteria continues to be met. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2016. Early adoption is permitted for financial statements that have not been previously issued. We expect to adopt the provisions of this new guidance on July 1, 2017. The provisions in this guidance can be applied on either a prospective basis or a modified retrospective basis. We do not expect the adoption of the new provisions to have a material impact on our financial condition or results of operations.

Leases: In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which increases transparency and comparability by requiring a lessee to record a right-of-use asset and lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification determining whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. ASU No. 2016-02 is effective for fiscal years and interim periods within those years beginning after December 15, 2018. Early adoption is permitted for financial statements that have not been previously issued. We expect to adopt the provisions of this new guidance on July 1, 2019. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are currently assessing the impact the adoption of the new provisions will have on our financial condition and results of operations.

Financial Instruments: In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,”which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2019. Early adoption is permitted for fiscal years and interim periods within those years beginning after December 15, 2018. We expect to adopt the provisions of this new guidance on July 1, 2020. We are currently assessing the impact the adoption of the new provisions will have on our financial condition and results of operations.

In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities,” which changes the guidance on the classification and measurement of financial instruments related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. It also amends certain disclosure requirements associated with the fair value of financial instruments. Under the new guidance, equity investments (excluding those accounted for under the equity method or those that result in consolidation) will be measured at fair value, with changes in fair value recognized in net income.  For financial liabilities that an entity has elected to measure at fair value in accordance with the fair value option guidance, the amendments require an entity to present separately in other comprehensive income the portion of the change in fair value that results from a change in instrument-specific credit risk. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2017. Early adoption is permitted for financial statements that have not been previously issued. We expect to adopt the provisions of this new guidance on July 1, 2018. We do not expect the adoption of the new provisions to have a material impact on our financial condition or results of operations.

Inventory: In July 2015, the FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory,” which states that inventory should be measured at the lower of cost and net realizable value. Net realizable value is defined as estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The new guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2016. We expect to adopt the provisions of this new guidance on July 1, 2017. The new guidance should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. We are currently assessing the impact the adoption of the new provisions will have on our financial condition and results of operations.

Revenue Recognition: In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” which amends the guidance for revenue recognition to replace numerous, industry-specific requirements and converges areas under this topic with those of the International Financial Reporting Standards. The new guidance implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The new guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. ASU No. 2014-09, as amended by ASU No. 2015-14, ASU No. 2016-08, ASU No. 2016-10, ASU No. 2016-12, and ASU No. 2016-20, is effective for fiscal years beginning after December 15, 2017. We expect to adopt the provisions of this new guidance on July 1, 2018. Entities can transition to the new standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. We are currently assessing the impact the adoption of the new provisions will have on our financial condition and results of operations, as well as the method of adoption.

Revenue Recognition and Derivatives: In May 2016, the FASB issued ASU No. 2016-11, “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting,”  which rescinds certain SEC comments that are codified in Topic 605 and Topic 815.  These rescissions include changes to accounting for shipping and handling fees and costs, accounting for consideration given by a vendor to a customer, and accounting to determine the nature of a host contract related to a hybrid financial instrument issued in the form of a share. ASU No. 2016-11 is effective for fiscal years beginning after December 15, 2017. We expect to adopt the provisions of this new guidance on July 1, 2018. We do not expect the adoption of the new provisions to have a material impact on our financial condition or results of operations.

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Allowance for Doubtful Accounts

6 Months Ended

Dec. 31, 2016

Receivables [Abstract]

Allowance for Doubtful Accounts

Note 3 – Allowance for Doubtful Accounts

We reserve an estimated amount for accounts receivable that may not be collected. Methodologies for estimating the allowance for doubtful accounts are based primarily on specific identification of uncollectible accounts. Historical collection rates and customer credit worthiness are considered in determining specific reserves. At December 31, 2016 and June 30, 2016, we had $17.8 million and $20.2 million, respectively, reserved for possible uncollectible accounts receivable.

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Inventories

6 Months Ended

Dec. 31, 2016

Inventory Disclosure [Abstract]

Inventories

Note 4 – Inventories

At December 31, 2016 and June 30, 2016, inventories consisted of the following:

	December 31, 2016		June 30, 2016
Finished goods	$	377,954	$	303,271
Work in process		78,011		80,972
Raw materials		331,594		321,841
Inventories	$	787,559	$	706,084

At December 31, 2016 and June 30, 2016, our inventory reserves were $97.5 million and $93.9 million, respectively.

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Property, Plant and Equipment, net

6 Months Ended

Dec. 31, 2016

Property Plant And Equipment [Abstract]

Property, Plant and Equipment, net

Note 5 – Property, Plant and Equipment, net

Property, plant and equipment, net consisted of the following:

	Estimated Useful Lives (in Years)	December 31, 2016			June 30, 2016
Land		$	9,274		$	9,504
Buildings and improvements	1-50		265,829			269,619
Machinery and equipment	3-20		1,355,527			1,341,816
Furniture and fixtures	3-10		28,882			28,251
Property, plant and equipment, gross			1,659,512			1,649,190
Less accumulated depreciation and amortization			(1,080,473	)		(1,055,900	)
Property, plant and equipment, net		$	579,039		$	593,290

Depreciation expense for the three months ended December 31, 2016 and 2015 was $37.4 million and $35.0 million, respectively, and was $73.1 million and $70.8 million for the six months ended December 31, 2016 and 2015, respectively.  

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Accrued Warranties

6 Months Ended

Dec. 31, 2016

Guarantees [Abstract]

Accrued Warranties

Note 6 – Accrued Warranties

Details of our accrued warranties are as follows:

	Six Months Ended December 31,
	2016			2015
Accrued warranties, June 30,	$	178,367		$	163,331
Warranty expense		47,089			31,647
Warranty payments (cash or in-kind)		(32,106	)		(26,005	)
Other(1)		(7,694	)		(4,226	)
Accrued warranties, December 31,	$	185,656		$	164,747

⁽¹⁾ Other primarily represents foreign currency translation.

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Earnings Per Share

6 Months Ended

Dec. 31, 2016

Earnings Per Share [Abstract]

Earnings Per Share

Note 7 – Earnings Per Share

We apply the two-class method when computing earnings per share, which requires that net income per share for each class of shares entitled to dividends be calculated assuming all of our net income is distributed as dividends to these shareholders based on their contractual rights.

The following table presents the calculation of basic and diluted earnings per share of common stock outstanding:

	Three Months Ended December 31,
	2016				2015
	Basic		Diluted		Basic		Diluted
Numerator for Basic and Diluted Earnings per Share:
Net income	$	99,449	$	99,449	$	113,187	$	113,187
Net income attributable to non-controlling interest		-		-		289		289
Net income attributable to Harman International Industries,    Incorporated	$	99,449	$	99,449	$	112,898	$	112,898
Denominator for Basic and Diluted Earnings per Share:
Weighted average shares outstanding		70,986		70,986		72,079		72,079
Employee stock options		-		726		-		751
Total weighted average shares outstanding		70,986		71,712		72,079		72,830
Earnings per Share:
Earnings per share	$	1.40	$	1.39	$	1.57	$	1.55

	Six Months Ended December 31,
	2016				2015
	Basic		Diluted		Basic		Diluted
Numerator for Basic and Diluted Earnings per Share:
Net income	$	202,566	$	202,566	$	200,703	$	200,703
Net income attributable to noncontrolling interest		-		-		707		707
Net income attributable to Harman International Industries,    Incorporated	$	202,566	$	202,566	$	199,996	$	199,996
Denominator for Basic and Diluted Earnings per Share:
Weighted average shares outstanding		70,938		70,938		72,060		72,060
Employee stock options		-		572		-		489
Total weighted average shares outstanding		70,938		71,510		72,060		72,549
Earnings per Share:
Earnings per share	$	2.86	$	2.83	$	2.78	$	2.76

Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are considered participating securities, as defined under GAAP, and are included in the computation of earnings per share pursuant to the two-class method.

Certain options were outstanding and not included in the computation of diluted net earnings per share because the assumed exercise of these options would have been antidilutive. Options to purchase 154,258 and 191,519 shares of our common stock for the three months ended December 31, 2016 and 2015, respectively, were outstanding and were excluded from the computation of diluted earnings per share as they would have been antidilutive. For the three months ended December 31, 2016 and 2015, there were no restricted stock units outstanding that were excluded from the computation of diluted earnings per share. Options to purchase 154,258 and 191,519 shares of our common stock for the six months ended December 31, 2016 and 2015, respectively, were outstanding and were excluded from the computation of diluted earnings per share as they would have been antidilutive. In addition, 144,535 and 263,392 restricted stock units for the six months ended December 31, 2016 and 2015, respectively, were outstanding and were excluded from the computation of diluted earnings per share as they also would have been antidilutive.

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Goodwill and Intangible Assets, Net

6 Months Ended

Dec. 31, 2016

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets, Net

Note 8 – Goodwill and Intangible Assets, Net

Goodwill

Goodwill was $1.500 billion at December 31, 2016 compared with $1.510 billion at June 30, 2016. The decrease in goodwill in the six months ended December 31, 2016 versus June 30, 2016 was primarily associated with unfavorable foreign currency translation of $9.7 million and a decrease of $0.1 million in connection with the acquisition of TowerSec Ltd. (“TowerSec”).

As discussed in Note 18 – Business Segment Data, we revised our segment and reporting unit structure effective July 1, 2016. Under this new structure, our Lifestyle Audio segment will now contain our car audio aftermarket services business which was previously included in our Connected Services segment. Our reporting units are the same as our reportable segments with the exception of Lifestyle Audio, which consists of two reporting units, car audio and consumer audio. In connection with this realignment, we reallocated our goodwill based on our new reporting structure based on each reporting unit’s relative fair value. We also performed a goodwill impairment test as of July 1, 2016 using our new reporting units structure. We determined that the fair value of each of our reporting units exceeded its carrying value and, as such, no impairments were deemed to exist as of this date.

The changes in the carrying amount of goodwill by business segment for the six months ended December 31, 2016 were as follows:

	Connected Car			Lifestyle Audio			Professional Solutions			Connected Services			Total
Balance, June 30, 2016	$	164,771		$	147,977		$	385,609		$	811,922		$	1,510,279
Realignment adjustments(1)		-			9,623			-			(9,623	)		-
Balance, June 30, 2016 – adjusted		164,771			157,600			385,609			802,299			1,510,279
Acquisitions and adjustments(2)		(100	)					(5	)					(105	)
Other adjustments(3)		(4,936	)		(1,628	)		(756	)		(2,355	)		(9,675	)
Balance, December 31, 2016	$	159,735		$	155,972		$	384,848		$	799,944		$	1,500,499

⁽¹⁾ The realignment adjustments reallocate our goodwill based on our new reporting structure based on the relative fair value of each reporting unit.

⁽²⁾ Refer to Note 22—Acquisitions for more information.

⁽³⁾ The other adjustments to goodwill primarily consist of foreign currency translation adjustments.

We did not recognize any goodwill impairment charges in our Condensed Consolidated Statements of Income in the three and six months ended December 31, 2016 and 2015.

The contingent purchase price associated with the acquisition of innovative Systems GmbH (“IS”) is calculated pursuant to the terms of an agreement between the parties. Certain terms of the agreement are currently subject to a dispute between certain parties and the matter has been submitted to arbitration.

On June 22, 2016, we executed an agreement with certain parties that previously owned 80.05% of IS (the “80.05% Shareholders”) to settle the remaining disputed matters with the 80.05% Shareholders that had been submitted to arbitration related to the contingent purchase price associated with our acquisition of IS. Under the terms of the agreement, we will pay the 80.05% Shareholders €76.8 million (the “IS Obligation”), with an initial payment of €24.8 million which was paid in July 2016 and four installment payments of €13 million due every July 1^st from 2017 through 2020.  In fiscal year 2016, we recorded approximately $74.5 million of additional contingent purchase price for this IS Obligation as an increase to goodwill. The agreement includes an option that, if exercised by the 80.05% Shareholders, would require us to make selected installment payments early, subject to an eight percent discount rate.  The existence of this option effectively makes this obligation due on demand and it has therefore been included in our Condensed Consolidated Balance Sheets in Current portion of long-term debt. Until such time as the disputed matters with the remaining shareholders that previously owned 19.95% of IS are resolved, we cannot calculate the contingent purchase price related to the acquisition of IS. Refer to Note 9—Debt for more information.

Intangible Assets, Net

Net intangible assets were $435.9 million and $476.3 million at December 31, 2016 and June 30, 2016, respectively, and were comprised of the following:

		December 31, 2016							June 30, 2016
	Weighted Average Amortization	Gross Carrying Amount		Accumulated Amortization			Net Amount		Gross Carrying Amount		Accumulated Amortization			Net Amount
Customer relationships	12 Years	$	386,686	$	(103,008	)	$	283,678	$	386,787	$	(75,957	)	$	310,830
Technology	6 Years		75,543		(33,946	)		41,597		75,431		(27,645	)		47,786
Patents	15 Years		7,256		(2,086	)		5,170		7,256		(1,584	)		5,672
Trade names(1)	-		100,617		(26,267	)		74,350		100,617		(26,231	)		74,386
Non-compete agreement	4 Years		3,146		(2,330	)		816		3,146		(2,060	)		1,086
Software	5 Years		44,219		(15,896	)		28,323		45,682		(11,945	)		33,737
Other	4 Years		10,491		(8,495	)		1,996		10,490		(7,703	)		2,787
Total		$	627,958	$	(192,028	)	$	435,930	$	629,409	$	(153,125	)	$	476,284

⁽¹⁾ Includes $55.7 million and $18.5 million of indefinite-lived intangible assets related to the acquisition of AMX LLC and AMX Holding Corporation (collectively “AMX”) and Martin Professional A/S, respectively.

Amortization expense related to intangible assets was $15.2 million and $23.0 million for the three months ended December 31, 2016 and 2015, respectively, and was $30.7 million and $44.1 million for the six months ended December 31, 2016 and 2015, respectively.

Amortization expense in each of the next five fiscal years and thereafter is expected to approximate the following:

2017	$	32,117
2018		59,567
2019		55,268
2020		50,194
2021		47,371
Thereafter		117,062
Total	$	361,579

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Debt

6 Months Ended

Dec. 31, 2016

Debt Disclosure [Abstract]

Debt

Note 9 – Debt

Short Term Borrowings

At December 31, 2016 and June 30, 2016 we had $2.8 million and $0 of short-term borrowings outstanding, respectively. At December 31, 2016 and June 30, 2016, we maintained lines of credit of $47.5 million and $53.4 million, respectively, primarily in India, China, Brazil, Israel and Denmark.

We classify our debt based on the contractual maturity dates of the underlying debt instruments. We defer costs associated with debt issuance over the applicable term of the debt. These costs are amortized to Interest expense, net in our Condensed Consolidated Statements of Income.

Issuance of 2.000 Percent Senior Notes

On May 27, 2015, we completed a public offering of €350.0 million in aggregate principal amount of Euro-denominated 2.000 percent Senior Notes due 2022 (the “2.000 Percent Senior Notes”), issued by Harman Finance International, S.C.A. (“Harman Finance”), which are fully and unconditionally guaranteed by Harman. Harman Finance is a wholly-owned finance subsidiary and has no independent activities, assets or operations other than in connection with the 2.000 Percent Senior Notes. The 2.000 Percent Senior Notes bear interest at a rate of 2.000 percent per year, payable annually in arrears on May 27 of each year, commencing on May 27, 2016 and will mature on May 27, 2022. The 2.000 Percent Senior Notes were issued at 99.613 percent of par value, reflecting a discount of €1.4 million to the aggregate principal amount, which is being amortized to Interest expense, net in our Condensed Consolidated Statements of Income using the effective interest method, over the term of the 2.000 Percent Senior Notes. We incurred €2.6 million of debt issuance costs in connection with the 2.000 Percent Senior Notes which are being amortized to Interest expense, net in our Condensed Consolidated Statements of Income using the effective interest method, over the term of the 2.000 Percent Senior Notes. The net proceeds from the issuance of the 2.000 Percent Notes were €346.0 million, net of the discount and debt issuance costs. The effective interest related to the 2.000 Percent Senior Notes, based on the net proceeds received is 2.060 percent. The 2.000 Percent Senior Notes were issued under an indenture, dated as of May 27, 2015, by and between Harman Finance, Harman, as guarantor, and a trustee, as supplemented by the first supplemental indenture, dated as of May 27, 2015, by and among Harman Finance, Harman, as guarantor, and a trustee (as supplemented, the “2.000 Percent Senior Notes Indenture”). All payments of interest and principal, including payments made upon any redemption of the 2.000 Percent Senior Notes, will be made in Euros, subject to certain exceptions if the Euro is unavailable.

Issuance of 4.150 Percent Senior Notes

On May 11, 2015, we completed a public offering of $400.0 million in aggregate principal amount of U.S. Dollar denominated 4.150 Percent Senior Notes due 2025 (the “4.150 Percent Senior Notes”) issued by Harman. The 4.150 Percent Senior Notes bear interest at a rate of 4.150 percent per year, payable semi-annually in arrears on May 15 and November 15 of each year, commencing on November 15, 2015, and will mature on May 15, 2025. The 4.150 Percent Senior Notes were issued at 99.336 percent of par value, reflecting a discount of $2.7 million to the aggregate principal amount, which is being amortized to Interest expense, net in our Condensed Consolidated Statements of Income using the effective interest method, over the term of the 4.150 Percent Senior Notes. We incurred $3.8 million of debt issuance costs in connection with the 4.150 Percent Senior Notes which are being amortized to Interest expense, net in our Condensed Consolidated Statements of Income using the effective interest method, over the term of the 4.150 Percent Senior Notes. The net proceeds from the issuance of the 4.150 Percent Senior Notes were $393.5 million, net of the discount and debt issuance costs. The effective interest related to the 4.150 Percent Senior Notes, based on the net proceeds received is 4.232 percent. The 4.150 Percent Senior Notes were issued under an indenture, dated as of May 11, 2015, by and between Harman and a trustee, as supplemented by the first supplemental indenture, dated as of May 11, 2015, by and between Harman and a trustee (as supplemented, the “4.150 Percent Senior Notes Indenture”).

2015 Credit Agreement

On March 26, 2015 we and our wholly-owned subsidiary Harman Holding GmbH & Co. KG (“Harman KG”), entered into a Multi-Currency Credit Agreement with a group of banks (the “2015 Credit Agreement”). The 2015 Credit Agreement provides for a five-year unsecured multi-currency revolving credit facility in the amount of $1.2 billion (the “Aggregate Commitment”) with availability in currencies other than the U.S. Dollar of up to $750.0 million. Up to $50.0 million of the Aggregate Commitment is available for letters of credit. Subject to certain conditions set forth in the 2015 Credit Agreement, the Aggregate Commitment may be increased by up to $500.0 million. However, there is presently no commitment for this additional borrowing ability. We may select interest rates for borrowings under the 2015 Credit Agreement equal to (i) the LIBO rate plus an applicable margin, (ii) the EURIBO rate plus an applicable margin, or (iii) a base rate plus an applicable margin, which in each case is based on ratings which are established by Standard & Poor’s Ratings Services (“S&P”) and Moody’s Investor Services (“Moody’s”). We pay a facility fee on the Aggregate Commitment, whether drawn or undrawn, which is also determined based on our ratings which are established by S&P and Moody’s.

At December 31, 2016 and June 30, 2016, there was approximately $513.0 million and $523.0 million, respectively, of outstanding borrowings, which are included in our Condensed Consolidated Balance Sheets as Borrowings under revolving credit facility. At December 31, 2016 and June 30, 2016 there were $4.1 million of outstanding letters of credit under the 2015 Credit Agreement. At December 31, 2016 and June 30, 2016, unused available credit under the 2015 Credit Agreement was $682.9 million and $672.9 million, respectively. In connection with the 2015 Credit Agreement, we incurred $3.0 million of fees and other expenses which are being amortized over the term of the 2015 Credit Agreement to Interest expense, net in our Condensed Consolidated Statements of Income on a straight-line basis.

IS Obligation

On June 22, 2016, we executed an agreement with the 80.05% Shareholders to settle with them the disputed matters related to the contingent purchase price associated with our acquisition of IS that had been submitted to arbitration. Under the terms of the agreement, we will pay the IS Obligation in accordance with the following schedule: an initial payment of €24.8 million which was paid in July 2016 and four installment payments of €13 million due every July 1^st from 2017 through 2020. The agreement includes an option that, if exercised by the 80.05% Shareholders, would require us to make selected installment payments early, subject to an eight percent discount rate.  The existence of this option effectively makes this obligation due on demand and it has therefore been included in our Condensed Consolidated Balance Sheets in Current portion of long-term debt.  Refer to Note 8-Goodwill and Intangible Assets, Net for more information.

At December 31, 2016 and June 30, 2016, total debt consisted of the following:

	Fair Value at December 31, 2016 (1)			Book Value at December 31, 2016			Fair Value at June 30, 2016 (1)			Book Value at June 30, 2016
Short-term debt	$	2,832		$	2,832		$	-		$	-
4.150 Percent Senior Notes		398,480			400,000			417,440			400,000
2.000 Percent Senior Notes		388,046			368,096			390,654			388,710
Borrowings under revolving credit facility		513,000			513,000			523,000			523,000
IS Obligation (2)		52,742			52,742			82,805			82,805
Capital lease obligations		10,470			10,470			12,322			12,322
Unamortized debt discount on 4.150 Percent Senior Notes		(2,293	)		(2,293	)		(2,407	)		(2,407	)
Unamortized debt discount on 2.000 Percent Senior Notes		(1,117	)		(1,117	)		(1,283	)		(1,283	)
Unamortized Senior Note Issuance Costs		(5,754	)		(5,754	)		(6,173	)		(6,173	)
Total debt		1,356,406			1,337,976			1,416,358			1,396,974
Short-term debt		(2,832	)		(2,832	)		-			-
Current portion of long-term debt (2)		(55,543	)		(55,543	)		(86,641	)		(86,641	)
Total long-term debt	$	1,298,031		$	1,279,601		$	1,329,717		$	1,310,333

⁽¹⁾ The estimated fair value of the 2.000 Percent Senior Notes and the 4.150 Percent Senior Notes were based on a broker quotation (Level 2). Under fair value accounting guidance, Level 2 is based on 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.

⁽²⁾ Amounts due under the IS Obligation have been recorded at their present value and will be accreted to the ultimate settlement amount through the effective-interest method (Level 2).  We are required to make payments of €13 million due every July 1^st from 2017 through 2020.  Because the IS Obligation has an option, which if exercised requires us to make selected installment payments on demand, it has been included as Current portion of long-term debt.  Refer to Note 8-Goodwill and Intangible Assets, Net for more information.

At December 31, 2016, total debt maturing in each of the next five fiscal years and thereafter is as follows:

2017	$	57,362
2018		3,038
2019		2,084
2020		514,652
2021		1,472
Thereafter		768,532
Total	$	1,347,140

Our existing debt agreements contain provisions that limit our operating and financing activities. The 2015 Credit Agreement contains certain negative covenants that limit, among other things, our ability to permit certain of our subsidiaries to incur debt and the ability of us and our subsidiaries to incur liens, make fundamental changes (including selling all or substantially all of our assets), undertake transactions with affiliates and undertake sale and leaseback transactions. The 2.000 Percent Senior Notes Indenture and the 4.150 Percent Senior Notes Indenture contain covenants that, subject to certain exceptions, limit our ability to incur indebtedness secured by principal properties, enter into certain sale and leaseback transactions with respect to principal properties and enter into certain mergers, consolidations and transfers of all or substantially all of the assets of Harman. In addition, the 2015 Credit Agreement contains more restrictive financial covenants that require us to maintain compliance with specified financial ratios. We may have to curtail some of our operations to maintain compliance with the covenants in our existing debt agreements. A violation of any of these covenants could result in a default under our debt agreements, which could permit the lenders to accelerate the repayment of any borrowings outstanding and/or the holders of the notes to direct the trustee to accelerate repayment of amounts outstanding under the notes. A default or acceleration under our debt agreements would result in increased capital costs and could adversely affect our ability to operate our business and our results of operations and financial condition. As of December 31, 2016, we were in compliance with all of the covenants contained in the 2015 Credit Agreement, the 2.000 Percent Senior Notes Indenture and the 4.150 Percent Senior Notes Indenture.

Interest expense is reported net of interest income in our Condensed Consolidated Statements of Income. Interest expense, net was $9.2 million and $7.7 million for the three months ended December 31, 2016 and 2015, respectively. Gross interest expense was $10.1 million and $8.6 million for the three months ended December 31, 2016 and 2015, respectively. The non-cash portion of gross interest expense was $0.9 million and $0.7 million, respectively, for the three months ended December 31, 2016 and 2015. The cash portion of gross interest expense was $9.2 million and $7.9 million for the three months ended December 31, 2016 and 2015, respectively. Interest income was$0.9 million for the three months ended December 31, 2016 and 2015.

Interest expense, net was $18.5 million and $15.9 million for the six months ended December 31, 2016 and 2015, respectively. Gross interest expense was $20.3 million and $17.4 million for the six months ended December 31, 2016 and 2015, respectively. The non-cash portion of gross interest expense was $1.9 million and $1.4 million for the six months ended December 31, 2016 and 2015, respectively.  The cash portion of gross interest expense was $18.4 million and $16.0 million for the six months ended December 31, 2016 and 2015, respectively. Interest income was $1.8 million and $1.5 million for the six months ended December 31, 2016 and 2015, respectively.

Non-cash interest expense for the three and six months ended December 31, 2016 relates to the amortization of the debt discount and debt issuance costs on the 2.000 Percent Senior Notes and the 4.150 Percent Senior Notes, the amortization of debt issuance costs on the 2015 Credit Agreement, and the accretion of the IS Obligation.

Non-cash interest expense for the three and six months ended December 31, 2015 relates to the amortization of the debt discount and debt issuance costs on the 2.000 Percent Senior Notes and the 4.150 Percent Senior Notes, and the amortization of debt issuance costs on the 2015 Credit Agreement.

Cash interest expense for the three and six months ended December 31, 2016 and 2015 primarily relates to interest on the 2.000 Percent Senior Notes, the 4.150 Percent Senior Notes, the 2015 Credit Agreement, and our short-term borrowings.

Interest income primarily relates to interest earned on our cash and cash equivalents and the variances from year to year are due to fluctuations in those balances and changes in interest rates.

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Income Taxes

6 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Income Taxes

Note 10 – Income Taxes

Our provision for income taxes is based on an estimated annual tax rate for the year applied to federal, state and foreign income. Income tax expense for the three months ended December 31, 2016 and 2015 was $60.9 million and $33.1 million, respectively. The effective tax rate for the three months ended December 31, 2016 and 2015 was 37.9 percent and 22.6 percent, respectively. The increase in the effective tax rate for the three months ended December 31, 2016 compared to the same period in the prior year was primarily due to a discrete tax charge of $22.7 million from deemed income on foreign earnings of which $3.7 million, $17.1 million and $1.9 million is attributable to fiscal years 2014, 2015 and 2016, respectively.

Income tax expense for the six months ended December 31, 2016 and 2015 was $98.3 million and $66.6 million, respectively. The effective tax rate for the six months ended December 31, 2016 and 2015 was 32.8 percent and 24.9 percent, respectively. The increase in the effective tax rate for the six months ended December 31, 2016 compared to the same period in the prior year was primarily due to a discrete tax charge of $22.7 million from deemed income on foreign earnings of which $3.7 million, $17.1 million and $1.9 million is attributable to fiscal years 2014, 2015 and 2016, respectively.

As of December 31, 2016 unrecognized tax benefits and the related interest were $65.6 million and $3.0 million, respectively, all of which would affect the tax rate if recognized. During the three months ended December 31, 2016, tax reserves decreased by $0.1 million primarily due to foreign currency translation that is recorded in the Condensed Consolidated Statements of Other Comprehensive Income. Related interest on prior year exposures was increased by $0.1 million. During the six months ended December 31, 2016, $0.3 million of tax reserves were established on new uncertain tax positions. Related interest on prior year exposures was increased by $0.2 million.

We periodically reevaluate the recognition and measurement threshold of our uncertain tax positions based on new or additional evidence such as tax authority administrative pronouncements, rulings and court decisions. The ultimate settlement however, may be materially different from the amount accrued. Our significant jurisdictions that are under examination are Germany, Austria and the U.S. The examination by the German revenue authorities for fiscal years 2005 through 2010 is closed, with the exception of one remaining issue that will proceed to the fiscal authority and court. The German revenue authorities commenced their examination for fiscal years 2011 to 2014 during the second quarter of fiscal year 2017. Additionally, the Austrian revenue authorities commenced their examination for fiscal years 2011 to 2014 during the second quarter of fiscal year 2017. The tax years currently under examination by the United States Internal Revenue Service (“IRS”) are fiscal years 2014 and 2015 for Harman. We do not expect these examinations to be closed for at least the next 12 months. Fiscal years 2006 to 2008 (and 2012 to 2013 for any rollforward adjustments) for Harman and fiscal years 2010 to 2012 for Harman Connected Services Holding Corp. (fka Symphony Teleca Corporation) are currently in the IRS Appeals process and are awaiting resolution. 

Although the final resolution of the examinations and appeals is uncertain, we believe that the ultimate disposition will not have a material adverse effect on our Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Income or our Condensed Consolidated Statements of Cash Flow. While we expect the amount of unrecognized tax benefits to change, we are unable to quantify the change at this time.  

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Shareholders' Equity

6 Months Ended

Dec. 31, 2016

Equity [Abstract]

Shareholders' Equity

Note 11 – Shareholders’ Equity

Preferred Stock

As of December 31, 2016 and June 30, 2016, we had no shares of preferred stock outstanding. We are authorized to issue 5 million shares of preferred stock, $0.01 par value.

Common Stock

We have 200 million authorized shares of common stock, $0.01 par value. At December 31, 2016 and June 30, 2016, we had 101,678,761 and 101,157,320 shares issued; 31,805,035 and 31,112,246 shares in treasury stock; and 69,873,726 and 70,045,074 shares outstanding (net of treasury stock), respectively.

Share Buyback Program

On October 28, 2014, our Board of Directors authorized the repurchase of up to $500.0 million of our common stock over a three year period (the “2014 Buyback Program”). The 2014 Buyback Program allows us to purchase shares of our common stock in accordance with applicable securities laws on the open market or through privately negotiated transactions during the authorized three year period. On November 14, 2016, Harman entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Samsung Electronics Co., Ltd., a Korean corporation (“Samsung”), Samsung Electronics America, Inc., a New York corporation and wholly owned subsidiary of Samsung, and Silk Delaware, Inc., a Delaware corporation and wholly owned subsidiary of Samsung USA (“Merger Sub”), pursuant to which Merger Sub will be merged with and into Harman  (the “Merger”), with Harman continuing as the surviving corporation and an indirect wholly owned subsidiary of Samsung.  Pursuant to the Merger Agreement, the 2014 Buyback Program has been suspended. In the event that the 2014 Buyback Program resumes, we will determine the timing and the amount of any repurchases based on an evaluation of market conditions, share price, other growth opportunities and other factors. We have and may, if the 2014 Buyback Program resumes, repurchase shares on the open market or, from time to time, through repurchase plans with one or more external brokers that provide a structure for execution of share repurchases under the 2014 Buyback Program. During the three months ended December 31, 2016 and 2015, we repurchased 241,357shares at a cost of $20.0 million and 123,850 shares at a cost of $12.9 million, respectively. During the six months ended December 31, 2016 and 2015 we repurchased 692,789shares at a cost of $55.2 million and 494,550 shares at a cost of $50.0 million, respectively, for a total cumulative buyback of 2,324,537shares at a cost of $195.2 million under the 2014 Buyback Program.

Changes in Equity:

The following is a summary of the changes in Accumulated Other Comprehensive Income (“AOCI”) and changes in equity for the six months ended December 31, 2016 and 2015:

($ in thousands, except per share data)	Preferred Stock		Common Stock		Additional Paid-in Capital			AOCI			Retained Earnings			Treasury Stock			Total Equity
Balance, June 30, 2016	$	-	$	1,012	$	1,410,765		$	(77,241	)	$	2,490,570		$	(1,372,633	)	$	2,452,473
Net income		-		-		-			-			202,566			-			202,566
Other comprehensive    income, net of tax		-		-					(23,689	)		-			-			(23,689	)
Exercise of stock options		-		5		7,484			-			-			-			7,489
Repurchases related to share-    based compensation    arrangements		-		-		(14,930	)		-			-			-			(14,930	)
Share-based compensation, net		-		-		30,058			-			-			-			30,058
Excess tax benefit from share-    based compensation		-		-		27,309			-			-			-			27,309
Treasury stock repurchases		-		-		-			-			-			(55,168	)		(55,168	)
Dividends ($0.35 per share)		-		-		-			-			(49,649	)		-			(49,649	)
Balance, December 31, 2016	$	-	$	1,017	$	1,460,686		$	(100,930	)	$	2,643,487		$	(1,427,801	)	$	2,576,459

($ in thousands, except per share data)	Preferred Stock		Common Stock		Additional Paid-in Capital			AOCI			Retained Earnings			Treasury Stock			Total Harman International Industries, Incorporated Shareholders’ Equity			Non Controlling Interest			Total Equity
Balance, June 30, 2015	$	-	$	1,007	$	1,365,257		$	11,434		$	2,229,517		$	(1,232,602	)	$	2,374,613		$	18,213		$	2,392,826
Net income		-		-		-			-			199,996			-			199,996			707			200,703
Other comprehensive    income, net of tax		-		-		-			(45,245	)		-			-			(45,245	)		-			(45,245	)
Exercise of stock options		-		4		5,527			-			-			-			5,531			-			5,531
Repurchases related to    share-based compensation    arrangements		-		-		(11,861	)		-			-			-			(11,861	)		-			(11,861	)
Share-based    compensation, net		-		-		20,941			-			-			-			20,941			-			20,941
Excess tax benefit from    share-based compensation		-		-		1,958			-			-			-			1,958			-			1,958
Treasury stock repurchases		-		-		-			-			-			(50,009	)		(50,009	)		-			(50,009	)
Dividends ($0.35 per share)		-		-		-			-			(50,382	)		-			(50,382	)		-			(50,382	)
Non-controlling interest		-		-		-			-			-			-			-			(4	)		(4	)
Balance, December 31, 2015	$	-	$	1,011	$	1,381,822		$	(33,811	)	$	2,379,131		$	(1,282,611	)	$	2,445,542		$	18,916		$	2,464,458

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Share-Based Compensation

6 Months Ended

Dec. 31, 2016

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Share-Based Compensation

Note 12 – Share-Based Compensation

On December 7, 2011 (the “Effective Date”), our shareholders approved the 2012 Stock Option and Incentive Plan (the “2012 Plan”), which is effective through December 7, 2021. As of the Effective Date, no further grants may be granted under our former plan, the Amended and Restated 2002 Stock Option and Incentive Plan, as amended (the “2002 Plan” and together with the 2012 Plan, the “Plans”). On December 4, 2013, we amended the 2012 Plan to (i) increase the number of shares available under the 2012 Plan for the grant of future awards by 2,869,821 shares to an aggregate amount not to exceed 7,269,821 shares of our common stock and (ii) modified certain share counting provisions related to the definition of a full-value grant from 1.71 to 1.5 (“Full-Value Grant”). On December 9, 2015, we further amended the 2012 Plan to increase the number of shares available under the 2012 Plan for the grant of future awards by 2,000,000 shares to an aggregate amount not to exceed 9,269,821 shares of our common stock. The 2012 Plan provides for two types of awards: (i) a Full-Value Grant under which one award shall reduce the shares available for grant under the 2012 Plan by 1.71 shares if granted prior to December 4, 2013 or 1.5 shares if granted on or after December 4, 2013, and (ii) an option or stock appreciation right grant, under which one award shall reduce the shares available for grant under the 2012 Plan by one share. Shares may be issued as original issuances, treasury shares or a combination of both. Option awards are granted with an exercise price equal to the market price of our common 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. During the six months ended December 31, 2016, 940,301 stock-settled restricted stock units, 6,136 cash-settled restricted stock units and 1,853 cash-settled stock appreciation rights were granted under the 2012 Plan. As of December 31, 2016, there were 3,844,426 shares available for grant under the 2012 Plan.

Share-based compensation expense, net was $19.9 million and $12.5 million for the three months ended December 31, 2016 and 2015, respectively, and was $30.1 million and $20.9 million for the six months ended December 31, 2016 and 2015, respectively. The total income tax benefit recognized in the Condensed Consolidated Statements of Income for share-based compensation arrangements was $5.3 million and $3.4 million for the three months ended December 31, 2016 and 2015, respectively, and was $7.6 million and $5.4 million for the six months ended December 31, 2016 and 2015, respectively.

Fair Value Determination

Stock Options

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model. There were no options granted during the six months ended December 31, 2016 and 2015.

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 the Plans as of December 31, 2016 and changes during the six months ended December 31, 2016 is presented below:

	Shares			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at June 30, 2016		667,579		$	73.30		4.57	$	8,044
Granted		-			-
Exercised		(164,636	)		56.30
Forfeited or expired		(43,220	)		112.24
Outstanding at December 31, 2016		459,723		$	75.73		3.70	$	17,373
Exercisable at December 31, 2016		458,166		$	75.56		3.69	$	17,371

The total intrinsic value of options exercised for the three months ended December 31, 2016 and 2015 was $6.0 million and $2.9 million, respectively, and was $7.1 million and $5.3 million for the six months ended December 31, 2016 and 2015, respectively.

Modification of Certain Stock Option Awards

Prior to fiscal year 2011, certain of the award agreements under the 2002 Plan stated that vested options not exercised were forfeited upon termination of employment for any reason other than death or disability. However, such award agreements provided that the Compensation and Option Committee of our Board of Directors (the “Compensation and Option Committee”) could extend the time period to exercise vested options 90 days beyond the employment termination date for certain employees. During the three and six months ended December 31, 2016 and 2015, the Compensation and Option Committee used this authority. This action represented a modification of the terms or conditions of an equity award and therefore was accounted for as an exchange of the original award for a new award. Incremental share-based compensation cost for the excess of the fair value of the new award over the fair value of the original award was immaterial.

Restricted Stock Units

In the six months ended December 31, 2016, we granted 210,476 restricted stock units with earnings per share (“EPS”) performance conditions, and 210,476 restricted stock units with market conditions under the 2012 Plan. Additionally, both the restricted stock units with EPS performance conditions and the restricted stock units with market conditions secondarily vest based on the achievement of a return on invested capital (“ROIC”) performance condition, specifically, the achievement of a certain average ROIC level over fiscal years 2017 through 2019. The restricted stock units with EPS performance conditions cliff vest three years from the date of grant based on the achievement of certain cumulative EPS levels from fiscal years 2017 through 2019. The restricted stock units with market conditions cliff vest three years from the date of grant based on a comparison of our total shareholder return (“TSR”) to the TSR of a selected peer group of publicly listed multinational companies. The grant date fair value of the restricted stock units with market conditions of $11.4 million was calculated using a Monte Carlo simulation model. Compensation expense is recognized ratably over the three-year vesting period based on the grant date fair value and our assessment of the probability that the applicable targets will be met for the performance conditions, which is reassessed each reporting period.

In the six months ended December 31, 2015, we granted 175,353 restricted stock units with EPS performance conditions and 175,353 restricted stock units with market conditions under the 2012 Plan. Additionally, both the restricted stock units with EPS performance conditions and the restricted stock units with market conditions secondarily vest based on the achievement of a ROIC performance condition, specifically, the achievement of a certain average ROIC level over fiscal years 2016 through 2018. The restricted stock units with EPS performance conditions cliff vest three years from the date of grant based on the achievement of certain cumulative EPS levels from fiscal years 2016 through 2018. The restricted stock units with market conditions cliff vest three years from the date of grant based on a comparison of our TSR to the TSR of a selected peer group of publicly listed multinational companies. The grant date fair value of the restricted stock units with market conditions of $12.3 million was calculated using a Monte Carlo simulation model. Compensation expense is recognized ratably over the three-year vesting period based on the grant date fair value and our assessment of the probability that the applicable targets will be met for the performance conditions, which is reassessed each reporting period.

In the fiscal year ended June 30, 2014, we granted 130,616 restricted stock units with EPS performance conditions and 130,641 restricted stock units with market conditions under the 2012 Plan. These restricted stock units cliff-vested in September 2016. Compensation expense, for both the restricted stock units with performance conditions and the restricted stock units with market conditions, was recognized ratably over the three-year vesting period based on the grant date fair value and our assessment of the probability that the applicable targets would be met, for awards with performance conditions. Of the restricted stock units with EPS performance conditions, 100 percent vested and of the restricted stock units with market conditions 78 percent vested based on the actual attainment of certain targets.

In the six months ended December 31, 2016 and 2015, we also granted 6,830 and 5,243 time-vested restricted stock units, respectively, without performance or market conditions, that cliff-vest three years from the date of grant, 501,440 and 363,788 time-vested restricted stock units, respectively, without performance or market conditions that vest ratably over the three-year vesting period, and 11,079 and 14,424 time-vested restricted stock units, respectively, without performance or market conditions, that cliff-vest one year from the date of grant, under the 2012 Plan.

In the six months ended December 31, 2016 and 2015, we granted 6,136 and 4,923 cash-settled restricted stock units, respectively, under the 2012 Plan. These restricted stock units are accounted for as liability awards and are recorded at the fair value at the end of the reporting period in accordance with their vesting schedules. During the six months ended December 31, 2016 and 2015, 2,268 and 869 cash-settled restricted stock units were settled, respectively. At December 31, 2016, 10,260 cash-settled restricted stock units were outstanding.

A summary of equity classified restricted stock unit activity as of December 31, 2016 and changes during the six months ended December 31, 2016 is presented below:

	Restricted Stock Units
Nonvested at June 30, 2016		1,494,947
Granted		940,301
Vested		(528,674	)
Forfeited		(125,880	)
Non-vested at December 31, 2016		1,780,694

At December 31, 2016, the aggregate intrinsic value of equity-classified restricted stock units was $197.9 million and there was $97.6 million of total unrecognized compensation cost related to equity classified restricted stock unit compensation arrangements. The weighted average recognition period was 2.0 years.

Stock Appreciation Rights

A summary of cash-settled stock appreciation rights as of December 31, 2016 and changes during the six months ended December 31, 2016 is presented below:

	Stock Appreciation Rights
Non-vested at June 30, 2016		4,342
Granted		1,853
Vested		(2,707	)
Forfeited		0
Non-vested at December 31, 2016		3,488
Exercisable		2,310

These stock appreciation rights are accounted for as liability awards and are recorded at the fair value at the end of the reporting period in accordance with their vesting schedules. The fair value of each stock appreciation right award is estimated on the date of grant using the Black-Scholes option valuation model, which uses the assumptions noted below.

	Six Months Ended December 31, 2016		Six Months Ended December 31, 2015
Expected volatility	36.8-38.8%		35.4-39.0%
Weighted-average volatility		38.1%		37.5%
Expected annual dividend	$ 1.40		$ 1.40
Expected term (in years)	3.44-5.44		2.56-4.56
Risk-free rate	0.9-1.3%		1.1-1.6%

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Derivatives

6 Months Ended

Dec. 31, 2016

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivatives

Note 13 – Derivatives

We are exposed to market risk from changes in foreign currency exchange rates and interest rates, which could affect our operating results, financial condition and cash flows. We manage our exposure to these risks through our regular operating and financial activities and, when appropriate, through the use of derivative financial instruments. These derivative instruments are utilized to hedge economic exposures, as well as to reduce volatility in earnings and cash flows resulting from shifts in market rates. We enter into limited types of derivative contracts including foreign currency spot and forward, as well as interest rate swap contracts, to manage foreign currency and interest rate exposures. Our primary foreign currency exposure is the Euro. The fair market values of all our derivative contracts change with fluctuations in interest rates and currency rates and are designed so that any changes in their values are offset by changes in the values of the underlying exposures. Derivative financial instruments are held solely as risk management tools and not for trading or speculative purposes.

We record all derivative instruments as either assets or liabilities at fair value in our Condensed Consolidated Balance Sheets. Certain of these derivative contracts have been designated as cash flow hedges, whereby gains and losses are reported within AOCI in our Condensed Consolidated Balance Sheets, until the underlying transaction occurs, at which point they are reported in earnings as gains and losses in our Condensed Consolidated Statements of Income. Certain of our derivatives, for which hedge accounting is not applied, are effective as economic hedges. These derivative contracts are required to be recognized each period at fair value, with gains and losses reported in earnings in our Condensed Consolidated Statements of Income and therefore do result in some level of earnings volatility. The level of volatility will vary with the type and amount of derivative hedges outstanding, as well as fluctuations in the currency and interest rate markets during the period. The related cash flow impacts of all our derivative activities are reflected as cash flows from operating activities.

Derivatives, by their nature, involve varying degrees of market and credit risk. The market risk associated with these instruments resulting from currency exchange and interest rate movements is expected to offset the market risk of the underlying transactions, assets and liabilities being hedged. We do not believe there is significant risk of loss in the event of non-performance by the counterparties associated with these instruments, because these transactions are executed with a diversified group of major financial institutions. Furthermore, our policy is to contract only with counterparties having a minimum investment grade or better credit rating. Credit risk is managed through the continuous monitoring of exposure to such counterparties.

Foreign Exchange Risk Management

We use foreign exchange contracts to hedge the price risk associated with foreign denominated forecasted purchases of materials used in our manufacturing process and to manage currency risk associated with operating costs in certain operating units, including foreign currency denominated intercompany loans and other foreign currency denominated assets. These contracts generally mature over the nextthree years. The majority of these contracts are designated as cash flow hedges.

At December 31, 2016 and June 30, 2016, we had outstanding foreign exchange contracts, primarily forward contracts, which are summarized below:

	December 31, 2016					June 30, 2016
	Gross Notional Value		Fair Value Asset/ (Liability)(1)			Gross Notional Value		Fair Value Asset/ (Liability)(1)
Currency Hedged (Buy/Sell):
U.S. Dollar/Euro	$	1,099,086	$	157,961		$	1,516,094	$	149,901
Indian Rupee/U.S. Dollar		260,200		7,068			251,355		(721	)
U.S. Dollar/Chinese Yuan		158,071		961			-		-
Euro/U.S. Dollar		140,579		(8,424	)		224,921		(6,280	)
Chinese Yuan/U.S. Dollar		25,486		(954	)		-		-
Mexican Peso/U.S. Dollar		16,519		(271	)		-		-
GBP/Euro		8,939		(95	)		-		-
Euro/Russian Rubles		8,125		(526	)		3,601		(667	)
U.S. Dollar/Russian Rubles		4,712		(590	)		9,517		(478	)
U.S. Dollar/Brazilian Real		3,863		(652	)		20,958		(2,459	)
U.S. Dollar/Australian Dollar		-		-			745		(37	)
Total	$	1,725,580	$	154,478		$	2,027,191	$	139,259

⁽¹⁾ Represents the net receivable included in our Condensed Consolidated Balance Sheets within Other current assets, Other assets, Accrued liabilities and Other non-current liabilities, as applicable.

Cash Flow Hedges

We designate a portion of our foreign exchange contracts as cash flow hedges of foreign currency denominated purchases and cash flow hedges of foreign currency denominated intercompany loans. As of December 31, 2016 and June 30, 2016, we had $1.448 billion and $1.608 billion of forward contracts maturing through May 2022. These contracts are recorded at fair value in the accompanying Condensed Consolidated Balance Sheets. The changes in fair value for these contracts are calculated on a forward-to-forward rate basis. These changes in fair value are reported in AOCI and are reclassified to either Cost of sales, Foreign exchange losses (gains), net, or Selling, general and administrative expenses (“SG&A”), depending on the nature of the underlying asset or liability that is being hedged, in our Condensed Consolidated Statements of Income, in the period or periods during which the underlying transaction occurs.

Changes in the fair value of the derivatives are highly effective in offsetting changes in the cash flows of the hedged items because the amounts and the maturities of the derivatives approximate those of the forecasted exposures. Any ineffective portion of the derivative is recognized in the current period in our Condensed Consolidated Statements of Income, in the same line item in which the foreign currency gain or loss on the underlying hedged transaction was recorded. We recognized $0.1 million of ineffectiveness in our Condensed Consolidated Statement of Income in the three months ended December 31, 2016 and 2015 and $(0.1) million and $0.1 million in the six months ended December 31, 2016 and 2015, respectively. At December 31, 2016 and June 30, 2016, the fair values of these contracts were net assets of $141.7 million and $131.9 million, respectively. The amount associated with these hedges that is expected to be reclassified from AOCI to earnings within the next 12 months is a gain of $110.2 million.

Economic Hedges

When hedge accounting is not applied to derivative contracts, or after former cash flow hedges have been de-designated as balance sheet hedges, we recognize the gain or loss on the associated contracts directly in current period earnings in our Condensed Consolidated Statements of Income as either Foreign exchange losses (gains), net, Cost of sales, or SG&A according to the underlying exposure. As of December 31, 2016 and June 30, 2016, we had $277.5 million and $419.1 million, respectively, of forward contracts maturing through October 2018 in various currencies to hedge foreign currency denominated intercompany loans and other foreign currency denominated assets. At December 31, 2016 and June 30, 2016, the fair values of these contracts were net assets of $12.8 million and $7.4 million, respectively. Adjustments to the carrying value of the foreign currency forward contracts offset the gains and losses on the underlying loans in Foreign exchange losses (gains), net in our Condensed Consolidated Statements of Income.

Interest Rate Risk Management

Interest Rate Lock

In May 2015, we entered into an interest rate lock on the 2.000 Percent Senior Notes. The interest rate lock was used to protect the interest rate on the 2.000 Percent Senior Notes between the time the lock was initiated and the time the 2.000 Percent Senior Notes were issued, therefore eliminating any interest rate risk leading up to the bond issuance. We recognized $0.1 million in AOCI which is being amortized into Interest expense, net in our Condensed Consolidated Statements of Income over the term of the 2.000 Percent Senior Notes.

The following tables provide a summary of the fair value amounts of our derivative instruments as of December 31, 2016 and June 30, 2016:

		Fair Value
Derivatives Designated as Cash Flow Hedges, Gross:	Balance Sheet Location	December 31, 2016		June 30, 2016
Other assets:
Foreign exchange contracts	Other current assets	$	93,467	$	69,122
Foreign exchange contracts	Other assets		52,375		67,232
Total assets			145,842		136,354
Other liabilities:
Foreign exchange contracts	Accrued liabilities	$	1,887	$	3,482
Foreign exchange contracts	Other non-current liabilities		2,232		993
Total liabilities			4,119		4,475
Net asset for derivatives designated as    hedging instruments		$	141,723	$	131,879
Derivatives Designated as Economic Hedges, Gross:
Other assets:
Foreign exchange contracts	Other current assets	$	21,217	$	14,761
Foreign exchange contracts	Other assets		251		345
Total assets			21,468		15,106
Other liabilities:
Foreign exchange contracts	Accrued liabilities	$	8,187	$	5,763
Foreign exchange contracts	Other non-current liabilities		526		1,963
Total liabilities			8,713		7,726
Net asset for economic hedges		$	12,755	$	7,380
Total net derivative asset		$	154,478	$	139,259

Derivative Activity:

The following tables summarize the activity of our derivative instruments designated as cash flow hedges for the three months ended December 31, 2016 and 2015:

Derivative	Location of Derivative Gain/(Loss) Recognized in Income	Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)						Gain/(Loss) Recognized in Income on Derivatives (Ineffective Portion)						Gain/(Loss) from Amounts Excluded from Effectiveness Testing
		Three Months Ended December 31,
		2016			2015			2016			2015			2016		2015
Foreign exchange contracts	Cost of sales	$	22,065		$	21,042		$	(94	)	$	(88	)	$	-	$	-
Foreign exchange contracts	SG&A		(93	)		24			-			-			-		-
Foreign exchange contracts	Foreign exchange losses (gains), net		(3,953	)		-			-			-			-		(3	)
Interest rate lock	Interest expense, net		(6	)		(5	)		-			-			-		-
Total cash flow hedges		$	18,013		$	21,061		$	(94	)	$	(88	)	$	-	$	(3	)

Derivative	Gain/(Loss) Recognized in AOCI (Effective Portion)
	Three Months Ended December 31,
	2016		2015
Foreign exchange contracts	$	55,613	$	41,467

The following tables summarize the activity of our derivative instruments designated as cash flow hedges for the six months ended December 31, 2016 and 2015:

Derivative	Location of Derivative Gain/(Loss) Recognized in Income	Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)						Gain/(Loss) Recognized in Income on Derivatives (Ineffective Portion)					Gain/(Loss) from Amounts Excluded from Effectiveness Testing
		Six Months Ended December 31,
		2016			2015			2016		2015			2016		2015
Foreign exchange contracts	Cost of sales	$	42,158		$	43,299		$	111	$	(116	)	$		$	-
Foreign exchange contracts	SG&A		(80	)		24			-		-			-		-
Foreign exchange contracts	Foreign exchange losses (gains), net		(3,335	)		-			-		-			-		(1	)
Interest rate lock	Interest expense, net		(11	)		(10	)		-		-			-		-
Total cash flow hedges		$	38,732		$	43,313		$	111	$	(116	)	$	-	$	(1	)

Derivative	Gain/(Loss) Recognized in AOCI (Effective Portion)
	Six months ended December 31,
	2016		2015
Foreign exchange contracts	$	53,944	$	51,448

The following table summarizes gains and losses from our derivative instruments that are not designated as hedging instruments for the three and six months ended December 31, 2016 and 2015:

	Location of Derivative Gain/(Loss)	Three Months Ended December 31,					Six Months Ended December 31,
Derivative	Recognized in Income	2016			2015		2016			2015
Foreign exchange contracts	Cost of sales	$	8,686		$	3,605	$	7,375		$	4,489
Foreign exchange contracts	Foreign exchange losses (gains), net		(5,266	)		2,963		(4,948	)		(3,479	)
Foreign exchange contracts	SG&A		(24	)		-		(26	)		-

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Fair Value Measurements

6 Months Ended

Dec. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 14 – Fair Value Measurements

Pursuant to the accounting guidance for fair value measurements, fair value is defined as the price we would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date. When determining the fair value measurements for assets and liabilities, we consider the principal or most advantageous market in which the asset or liability would transact in and we consider assumptions that market participants would use when pricing the asset or liability.

Fair Value Hierarchy

Under fair value accounting guidance, there is a three-tier fair value hierarchy to prioritize the inputs used in measuring fair value. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions.

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 that reflect the entity’s own assumptions in measuring the asset or liability at fair value.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

For assets and liabilities measured at fair value on a recurring basis, fair value is the price we would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date. In the absence of active markets for the identical assets and liabilities, such measurements involve developing assumptions based on market observable data, and in the absence of such data, internal information that is consistent with what market participants would use in a hypothetical transaction that occurs at the measurement date.

The following table provides the fair value hierarchy for assets and liabilities measured on a recurring basis.

	Fair Value at December 31, 2016							Fair Value at June 30, 2016
Description	Level 1		Level 2		Level 3			Level 1		Level 2		Level 3
Assets/(Liabilities)
Available-for-sale securities	$	55,907	$	-	$	15,000		$	54,447	$	-	$	-
Foreign exchange contracts		-		154,478		-			-		139,259		-
Pension assets		2,927		-		-			3,090		-		-
Contingent consideration		-		-		(63,806	)		-		-		(50,727	)
Net asset/(liability)	$	58,834	$	154,478	$	(48,806	)	$	57,537	$	139,259	$	(50,727	)

	Total Gains (Losses) for the Three Months Ended December 31,						Total Gains (Losses) for the Six months ended December 31,
Description of Liability	2016			2015			2016			2015
Contingent Consideration	$	(3,746	)	$	(457	)	$	(15,332	)	$	(914	)

The following describes the valuation methodologies we use to measure assets and liabilities accounted for at fair value on a recurring basis:

Available-for-Sale Securities: Available-for-sale securities are classified as Level 1 when the fair value is determined from market quotes obtained from financial institutions in active markets. Available-for-sale securities are classified as Level 3 when relevant observable inputs for a security are not available.

In August 2016, we purchased a convertible debt security issued by a nonpublic entity for $15.0 million and classified the security as available-for-sale.  This available-for-sale debt security is measured at fair value each reporting period, with unrealized gains and losses recorded in other comprehensive income. We measure its fair value using an income approach that incorporates probability-weighted outcomes.  We classified this investment as Level 3 due to the lack of observable market data over fair value inputs such as the fair value of the nonmarketable equity shares underlying the conversion option. Changes in the estimated fair value of the nonmarketable equity shares underlying the conversion option contribute to changes in the fair value of the available-for-sale debt security.  Additionally, updated estimates of the assessed likelihood of a default by the issuer contribute to changes in the fair value of the available-for-sale debt security. As of December 31, 2016, the fair value of this available-for-sale debt security was $15.0 million.The contractual maturity date is August 18, 2018.

Foreign Exchange Contracts: We use foreign exchange contracts to hedge market risks relating to possible adverse changes in foreign currency exchange rates. Our foreign exchange contracts were measured at fair value using Level 2 inputs. Such inputs include foreign currency exchange spot and forward rates for similar transactions in actively quoted markets.

Pension Assets: Our pension assets have been valued using Level 1 inputs as quoted prices in an active market exist for these assets. Refer to Note 17—Retirement Benefits for more information.

Contingent Consideration: At December 31, 2016, a portion of our contingent consideration is associated with an earn-out related to the acquisition of TowerSec. We use a Monte Carlo simulation model (a form of the income approach) in determining the fair value of the contingent consideration. The principal inputs to the approach include our expectations of the achievement of certain targets for awarded business through March 10, 2019, risk-free rates, volatility, credit spreads, and the weighted average cost of capital.  At June 30, 2016, our estimate of the fair value of this contingent consideration liability was $27.7 million.  During the three and six months ended December 31, 2016, we reconfirmed our estimate of the fair value of this contingent consideration liability.

A portion of our contingent consideration is associated with a $30.0 million earn-out related to the acquisition of Redbend Ltd (“Redbend”). We use a discounted cash flow approach (a form of the income approach) in determining the fair value of the contingent consideration. The principal inputs to the approach include our expectations of the achievement of Redbend’s cumulative bookings target for awarded business from January 1, 2015 through December 31, 2016 and a discount rate that begins with our weighted average cost of capital and adjusts for the risks associated with the underlying cumulative bookings target for awarded business outcome, the functional form of the payout and our credit risk associated with making the payment. At June 30, 2016, our estimate of the fair value of this contingent consideration liability was $18.4 million.  During the three months ended September 30, 2016, we revised our estimate of the fair value of this contingent consideration liability to $30.0 million. During the three months ended December 31, 2016, we reconfirmed our estimate of the fair value of this contingent consideration liability.

A portion of our contingent consideration is associated with a $10.0 million earn-out related to the acquisition of Southern Vision Systems, Inc. (“SVSI”). We use a discounted cash flow approach (a form of the income approach) in determining the fair value of the contingent consideration. The principal input to the approach is our expectation of the achievement of SVSI’s contribution margin targets related to the sale of certain products through June 30, 2018. At June 30, 2016, our estimate of the fair value of this contingent consideration liability was $3.0 million.  During the three months ended September 30, 2016, we made a payment of approximately $2.1 million related to fiscal year 2016 results.  During the three and six months ended December 31, 2016, we revised our estimate of the fair value of this contingent consideration liability to $4.7 million

A portion of our contingent consideration is associated with an earn-out related to our acquisition of Duran Audio BV (“Duran”). We use a probability-weighted discounted cash flow approach (a form of the income approach) in determining the fair value of the contingent consideration. The principal inputs to the approach include our expectations of Duran’s gross profit related to the sale of certain specified products through June 30, 2020 and a discount rate that begins with our weighted average cost of capital and adjusts for the risks associated with the underlying Duran gross profit outcome, the functional form of the payout and our credit risk associated with making the payment.  At June 30, 2016, our estimate of the fair value of this contingent consideration liability was $1.6 million.  During the three months ended September 30, 2016, we made a payment of approximately $0.1 million related to fiscal year 2016 results.  During the three and six months ended December 31, 2016, we reconfirmed our $1.5 million estimate of the fair value of this contingent consideration liability.

A portion of our contingent consideration is associated with an earn-out related to the acquisition of I.P.S.G International Product Solution Group Pty Ltd. and VFX Systems Pty Ltd. (collectively “IPSG/VFX”). We determined the fair value of the contingent consideration based on our expectations of IPSG/VFX’s gross profit related to the sale of certain specified products through June 30, 2017.  At June 30, 2016, our estimate of the fair value of this contingent consideration liability was $0.  During the three and six months ended December 31, 2016, we reconfirmed our estimate of the fair value of this contingent consideration liability.

Given the use of significant inputs that are not observable in the market, our contingent consideration is classified within Level 3 of the fair value hierarchy. Refer to Note 22—Acquisitions for more information.

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

Certain assets are measured at fair value on a non-recurring basis. These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. These assets can include long-lived assets that have been reduced to fair value when they are held for sale or impaired, goodwill that has been reduced to fair value when it is impaired, cost and equity method investments and the remeasurement of retained investments in formerly consolidated subsidiaries upon a change in control that results in deconsolidation of a subsidiary if we sell a controlling interest and retain a noncontrolling stake in the entity. Assets that are written down to fair value when impaired and retained investments are not subsequently adjusted to fair value unless further impairment occurs.

The following table provides the carrying value for assets and liabilities measured on a non-recurring basis, all of which are measured under Level 3 of the fair value hierarchy, and the losses recorded during the periods presented. There were no gains or losses recognized in the three and six months ended December 31, 2016 and 2015.

Description of Assets	December 31, 2016		June 30,2016
Equity method investments	$	1,950	$	1,175
Goodwill		1,500,499		1,510,279
Long-lived assets		1,014,969		1,069,574
Total	$	2,517,418	$	2,581,028

The following describes the valuation methodologies we use to measure financial and non-financial instruments accounted for at fair value on a non-recurring basis.

Equity Method Investments: Equity method investments are generally valued using a discounted cash flow model, comparative market multiples or a combination of both approaches as appropriate. These investments are generally included in Level 3.

Goodwill: Goodwill is evaluated for impairment annually or more frequently if an event or circumstance indicates that an impairment loss may have been incurred. This asset is included in Level 3. Refer to Note 8—Goodwill and Intangible Assets, Net for more information.

Long-lived Assets: Long-lived assets include Property, plant and equipment, net and intangible assets, and are valued using the best information available, including quoted market prices or market prices for similar assets when available or internal cash flow estimates discounted at an appropriate interest rate or independent appraisals, as appropriate. For real estate, cash flow estimates are based on current market estimates that reflect current and projected lease profiles and available industry information about expected trends in rental, occupancy and capitalization rates. These assets are generally included in Level 3.

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Other Comprehensive Income (Loss)

6 Months Ended

Dec. 31, 2016

Equity [Abstract]

Other Comprehensive Income (Loss)

Note 15 – Other Comprehensive Income (Loss)

Other comprehensive income (loss) is comprised of the following:

	Three Months Ended December 31, 2016						Three Months Ended December 31, 2015						Six Months Ended December 31, 2016						Six Months Ended December 31, 2015
	Pre-Tax			Net of Tax			Pre-Tax			Net of Tax			Pre-Tax			Net of Tax			Pre-Tax			Netof Tax
Foreign currency translation    losses	$	(46,751	)	$	(46,751	)	$	(19,924	)	$	(19,924	)	$	(43,360	)	$	(43,360	)	$	(53,247	)	$	(53,247	)
Changes in hedging derivatives:
Reclassifications from AOCI into    income (effective portion)(1)		(22,065	)		(19,285	)		(21,042	)		(16,737	)		(42,158	)		(41,528	)		(43,299	)		(35,656	)
Reclassifications from AOCI into    income (effective portion)(2)		93			81			(24	)		(19	)		80			79			(24	)		(20	)
Reclassifications from AOCI into    income (effective portion)(3)		6			5			5			4			11			9			10			8
Reclassifications from AOCI into    income (effective portion)(6)		3,953			3,455			-			-			3,335			3,285			-			-
Gains recognized in AOCI (effective portion)		55,613			48,606			41,467			32,984			53,944			53,138			51,448			42,367
Other gains		669			585			87			69			675			665			23			19
Change in hedging derivatives		38,269			33,447			20,493			16,301			15,887			15,648			8,158			6,718
Pension liability adjustment:
Amortization of prior service cost(4)		214			152			247			166			428			301			494			347
Amortization of net loss(4)		1,029			732			1,309			878			2,081			1,464			2,624			1,842
Expected return on plan assets(4)		(27	)		(19	)		(31	)		(21	)		(55	)		(39	)		(62	)		(44	)
Other gains (losses) (5)		3,013			2,145			1,483			995			2,480			1,749			(1,154	)		(810	)
Pension liability adjustment		4,229			3,010			3,008			2,018			4,934			3,475			1,902			1,335
Unrealized (losses) gains on    available-for-sale securities		(735	)		(468	)		53			34			857			548			(81	)		(51	)
Other comprehensive (loss) income		(4,988	)		(10,762	)		3,630			(1,571	)		(21,682	)		(23,689	)		(43,268	)		(45,245	)
Other comprehensive (loss) income    attributable to Harman International    Industries, Incorporated	$	(4,988	)	$	(10,762	)	$	3,630		$	(1,571	)	$	(21,682	)	$	(23,689	)	$	(43,268	)	$	(45,245	)

⁽¹⁾ Reclassified to Cost of sales in our Condensed Consolidated Statements of Income. Refer to Note 13 – Derivatives for more information.

⁽²⁾ Reclassified to SG&A in our Condensed Consolidated Statements of Income. Refer to Note 13 – Derivatives for more information.

⁽³⁾ Reclassified to Interest expense, net in our Condensed Consolidated Statements of Income. Refer to Note 13 – Derivatives for more information.

⁽⁴⁾ Reclassified to SG&A in our Condensed Consolidated Statements of Income. Refer to Note 17 – Retirement Benefits for more information.

⁽⁵⁾ Primarily represents currency impact on cumulative amount of benefit plan net actuarial losses and prior service credits included in AOCI.

⁽⁶⁾ Reclassified to Foreign exchange losses (gains), net in our Condensed Consolidated Statements of Income. Refer to Note 13–Derivatives for more information.

AOCI: At December 31, 2016 and June 30, 2016 AOCI consisted of the following:

Income/(Loss):	December 31, 2016			June 30, 2016
Cumulative translation adjustment	$	(165,378	)	$	(122,018	)
Pension liability adjustment		(54,970	)		(58,445	)
Unrealized gains on hedging derivatives		119,539			103,891
Unrealized losses on available-for-sale securities		(121	)		(669	)
Total AOCI	$	(100,930	)	$	(77,241	)

At December 31, 2016, we had approximately $9 million and $61.9 million of investments included in Other current assets and Non-current assets, respectively, in our Condensed Consolidated Balance Sheets that have been classified as available-for-sale securities. At June 30, 2016, we had approximately $8.9 million and $45.6 million of investments included in Other current assets and Non-current assets, respectively, in our Condensed Consolidated Balance Sheets that have been classified as available-for-sale securities. These securities are recorded at fair value with realized gains and losses recorded in income and unrealized gains and losses recorded in AOCI, net of taxes.

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Restructuring Program

6 Months Ended

Dec. 31, 2016

Restructuring And Related Activities [Abstract]

Restructuring Program

Note 16 – Restructuring Program

Our restructuring program that is designed to improve our global footprint, cost structure, technology portfolio, human resources and internal processes continues. For the three and six months ended December 31, 2016 and 2015, we continued to refine existing programs and launched new programs focused on achieving further productivity improvements to: (i) optimize certain research and development, supply chain and administrative functions; (ii) outsource certain manufacturing capabilities; (iii) divest or sublease facilities no longer needed to support current operations; and (iv) relocate certain functions to best cost countries.

A summary and components of our restructuring initiatives are presented below and include accruals for new programs as well as revisions to estimates, both increases and decreases, to programs accrued in prior periods:

	Severance Related Costs			Third Party Contractor Termination Costs			Facility Closure and Other Related Costs			Asset Impairments(1)			Total
Liability, June 30, 2016	$	18,068		$	435		$	5,691		$	-		$	24,194
Expense(2)		30,889			843			1,308			666			33,706
Accumulated depreciation offset		-			-			-			(666	)		(666	)
Payments		(7,660	)		-			(1,723	)					(9,383	)
Foreign currency translation		(477	)		9			5						(463	)
Liability, December 31, 2016	$	40,820		$	1,287		$	5,281		$	-		$	47,388
Liability, June 30, 2015	$	60,789		$	-		$	4,590		$	-		$	65,379
Expense(2)		1,112			372			629			3,964			6,077
Accumulated depreciation offset		-			-			-			(3,964	)		(3,964	)
Payments		(26,924	)		-			(1,130	)		-			(28,054	)
Foreign currency translation		(1,041	)		(7	)		2			-			(1,046	)
Liability, December 31, 2015	$	33,936		$	365		$	4,091		$	-		$	38,392

⁽¹⁾ Credits related to restructuring charges for accelerated depreciation and inventory provisions are recorded against the related assets in Property, plant and equipment, net or Inventories in our Condensed Consolidated Balance Sheets and do not impact the restructuring liability.

⁽²⁾ Restructuring expenses noted above are primarily in SG&A in our Condensed Consolidated Statements of Income. Asset impairments which consist of accelerated depreciation and inventory provisions are primarily in Cost of sales in our Condensed Consolidated Statements of Income.

Restructuring liabilities are recorded in Accrued liabilities and Other non-current liabilities in our Condensed Consolidated Balance Sheets.

Restructuring expenses by reporting business segment are presented below:

	Three Months Ended December 31,					Six Months Ended December 31,
	2016		2015			2016		2015
Connected Car	$	18,832	$	(443	)	$	20,245	$	(1,237	)
Lifestyle Audio		711		867			3,331		1,174
Professional Solutions		243		2,522			8,716		2,176
Connected Services		680		-			748		-
Other		-		-			-		-
Total		20,466		2,946			33,040		2,113
Asset Impairments		598		1,940			666		3,964
Total	$	21,064	$	4,886		$	33,706	$	6,077

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Retirement Benefits

6 Months Ended

Dec. 31, 2016

Compensation And Retirement Disclosure [Abstract]

Retirement Benefits

Note 17 – Retirement Benefits

Plan Descriptions

Retirement savings plan

We provide a Retirement Savings Plan (the “Savings Plan”) for certain employees in the United States. Under the Savings Plan, and subject to certain limitations: (i) employees may contribute up to 50 percent of their pretax compensation; (ii) each business unit will make a safe harbor non-elective contribution in an amount equal to three percent of a participant’s pre-tax compensation; and (iii) each business unit may also make a matching contribution of 50 percent of an employee’s tax-deferred compensation, up to the first six percent of a participant’s pre-tax compensation. Matching contributions vest at a rate of 25 percent for each year of service with the employer, beginning with the second year of service.

Pension benefits

We provide defined pension benefits to certain eligible employees. The measurement date used for determining pension benefits is the last day of our fiscal year, June 30^th. We have certain business units in Europe and Asia that maintain defined benefit pension plans for many of our current and former employees. The coverage provided and the extent to which the retirees’ share in the cost of the program vary by business unit. Generally, plan benefits are based on age, years of service and average compensation during the final years of service. In the United States, we have a Supplemental Executive Retirement Plan (the “SERP”) that provides retirement, death and termination benefits, as defined in the SERP, to certain key executives designated by our Board of Directors. The majority of our defined benefit plans do not have contractual or statutory provisions which specify minimum funding requirements. We are in compliance with all existing contractual obligations and statutory provisions.

The SERP is an unfunded plan for tax purposes and under the Employee Retirement Income Security Act of 1974 (“ERISA”) all obligations arising under the SERP are payable from our general assets. To assist in the funding of the benefits under the SERP, we maintain assets in an irrevocable trust whereby the use of these assets is restricted to funding our future benefit obligations under the SERP. These assets are not plan assets of the SERP, therefore, in the event of bankruptcy, the assets become unrestricted and the SERP would become a general creditor of our company. The assets and liabilities, and earnings and expenses, of the irrevocable trust are consolidated in our condensed consolidated financial statements. As of December 31, 2016 and June 30, 2016, there were $94.4 million and $92.7 million, respectively, of total assets included in the irrevocable trust of which $0.0 million and $0.1 million, respectively, in each period consisted of Cash and cash equivalents, $41.2 million and $40.8 million, respectively, consisted of the cash surrender value of life insurance policies and $53.2 million and $51.8 million, respectively, consisted of equity and fixed income mutual funds, which are classified as available-for-sale securities.

The following table presents the components of net periodic benefit cost for the three and six months ended December 31, 2016 and 2015:

	Three Months Ended December 31,						Six Months Ended December 31,
	2016			2015			2016			2015
Service cost	$	1,599		$	1,405		$	3,253		$	2,839
Interest cost		1,207			1,714			2,433			3,441
Expected return on plan assets		(27	)		(31	)		(55	)		(62	)
Amortization of prior service cost		214			247			428			494
Amortization of net loss		1,029			1,309			2,081			2,624
Curtailments and settlements		-			(90	)		-			(182	)
Net periodic benefit cost	$	4,022		$	4,554		$	8,140		$	9,154

During the three months ended December 31, 2016 and 2015, we made contributions of $2.5 million and $2.3 million, respectively, to the defined benefit pension plans which were paid to participants.  During the six months ended December 31, 2016 and 2015, we made contributions of $5.1 million and $4.7 million, respectively, to the defined benefit pension plans which were paid to participants.  We expect to make approximately $5.2 million in contributions for the remainder of the fiscal year ending June 30, 2017.

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Business Segment Data

6 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Business Segment Data

Note 18 – Business Segment Data

Effective July 1, 2016, we revised our business segments in order to better align them with our strategic approach to the markets and customers we serve. Prior period segment amounts throughout the condensed consolidated financial statements have been reclassified to the new segment structure. The reclassification of historical business segment information had no impact on our basic financial statements.

The accounting principles applied at the operating segment level in determining income (loss) from operations are the same as those applied at the consolidated financial statement level. Goodwill was allocated to our segments based on the relative fair value of the components of our reporting units that were affected by our change in segments. Refer to Note 8 – Goodwill and Intangible Assets, Net for more information.

We design and engineer connected products and solutions, including connected car, audio and visual products, enterprise automation solutions and connected services for consumers, automakers, and enterprises worldwide. Our chief operating decision maker evaluates performance and allocates resources based on net sales, operating income and working capital in each of the operating segments which are also our reporting segments.

Connected Car

Our Connected Car segment designs, manufactures and markets connected car systems for vehicle applications to be installed primarily as original equipment by automotive manufacturers. Our scalable connected car platforms deliver enhanced and connected capabilities to the car, including intelligent high-performance navigation with embedded solutions for multimedia, premium entertainment tuners, and on-board and off-board connectivity that addresses a wide range of vehicle categories. Leveraging a software-driven computer platform, we offer an integrated suite of technologies that extends beyond infotainment to encompass telematics, connected safety, and over-the-air update capabilities.  We also offer a comprehensive suite of automotive cyber security solutions through a multi-layer architecture that can protect not only future vehicles, but connected cars on the road today. Global customers for our connected car systems include BMW, Daimler, Fiat Chrysler Automobiles, Ford, Geely, General Motors, Hyundai, Qoros, Subaru, Suzuki, TATA, Toyota/Lexus, Ssangyong, the Volkswagen Group and Yamaha. We also produce an infotainment system for Harley-Davidson touring motorcycles.

Lifestyle Audio

Our Lifestyle Audio segment designs, manufactures and markets car audio systems for vehicle applications to be installed primarily as original equipment by automotive manufacturers, as well as a wide range of consumer audio products including mid-to high-end loudspeaker and electronics, headphones, embedded audio products for consumer electronics and branded portable wireless speakers. Our Lifestyle Audio segment also now includes our car audio aftermarket services business which was previously included in our Connected Services segment. We believe that we continue to redefine audio excellence for the home, the car and on-the-go listening. Our Lifestyle Audio products are marketed worldwide under renowned brand names including AKG^®, Harman/Kardon^®, Infinity^®, JBL^®, JBL Professional, JBL Synthesis^®, Lexicon^®, Mark Levinson^® and Revel^®.  We also have rights to use the Bowers & Wilkins^®, Bang & Olufsen^® and Canton^® brand names within the automotive space. Global customers for our premium car audio systems include Aston Martin, BMW, Brilliance, Chang’an, Daimler, Dongfeng, Fiat Chrysler Automobiles, Ford, Geely, General Motors, Great Wall, Hyundai, McLaren, PSA Peugeot Citroën, SAIC, Subaru, Tesla, Toyota/Lexus and the Volkswagen Group. Our car audio products feature innovative technologies such as Clari-Fi^TM, HALOsonic^TM and Quantum Logic Surround™.  Our consumer audio products are sold in mass-market retail stores such as Apple, Best Buy, Target, Media Markt and Fnac, specialty audio stores, Harman stores, through online retailers such as Amazon.com, and directly online at Harmanaudio.com.

Professional Solutions

Our Professional Solutions segment designs, manufactures and markets an extensive range of audio, lighting, video and control, and automation solutions for entertainment and enterprise applications, including live concerts and festivals, stadiums, airports, hotels and resorts, conference centers, educational institutions, command centers and houses of worship. We offer a variety of products, including loudspeakers, amplifiers, digital signal processors, microphones, headphones, mixing consoles, guitar pedals, lighting, video and control, and enterprise automation solutions. Our Professional Solutions audio products are used at important events in prestigious venues, such as the GRAMMY® Awards, the Emmy® Awards, the Super Bowl®, the Oscars®, the MTV® Video Music Awards, the Country Music Awards®  and Yankee Stadium. Our Professional Solutions products are marketed globally under a number of well-established brand names, including AKG, AMX^®, BSS^®, Crown^®, dbx^®, DigiTech^®, JBL Professional, Lexicon, Martin^®, Soundcraft^® and Studer^®.

Connected Services

Our Connected Services segment includes the operating results of Symphony Teleca Corporation (“STC”), and Redbend and our automotive services business. Our Connected Services segment creates innovative software solutions that integrate design, mobility, cloud and analytics and brings the benefits of the connected world to the automotive, retail, mobile, healthcare, media and consumer electronics markets. Our Connected Services segment offers services and solutions in order to help customers understand and visualize their data so they can make faster and more informed decisions, cloud-enable their businesses, support technical agility and exploit omni-channel strategies. Our Connected Services segment customers include BMW, British Telecom, Daimler, Jaguar Land Rover, Microsoft, Polycom and the Volkswagen Group.

Other

Other includes compensation, benefits and occupancy costs for corporate employees, net of reporting segment allocations, expenses associated with new technology innovation and our corporate brand identity campaign.

The following tables report Net sales and Operating income (loss) by each reporting segment for the three and six months ended December 31, 2016 and 2015:

	Three Months Ended December 31,						Six Months Ended December 31,
	2016			2015			2016			2015
Net sales:
Connected Car	$	769,299		$	736,969		$	1,566,416		$	1,492,452
Lifestyle Audio		765,022			641,309			1,333,404			1,117,380
Professional Solutions		255,650			248,871			495,873			495,977
Connected Services		173,308			153,540			339,979			313,453
Other		-			-			-			39
Eliminations **		(15,805	)		(8,532	)		(28,676	)		(16,256	)
Total	$	1,947,474		$	1,772,157		$	3,706,996		$	3,403,045
Operating income (loss):
Connected Car	$	76,958		$	84,266		$	171,876		$	171,485
Lifestyle Audio		125,798			83,018			204,480			130,271
Professional Solutions		10,228			23,952			21,910			49,637
Connected Services		19,629			4,865			21,192			10,496
Other		(58,599	)		(36,948	)		(94,633	)		(71,269	)
Total	$	174,014		$	159,153		$	324,825		$	290,620

	Three Months Ended December 31, 2016
	Net Sales			Eliminations **			Third Party Sales
Net sales:
Connected Car	$	769,299		$	(6	)	$	769,293
Lifestyle Audio		765,022			(762	)		764,260
Professional Solutions		255,650			(1,020	)		254,630
Connected Services		173,308			(14,017	)		159,291
Other		-			-			-
Eliminations **		(15,805	)		15,805			-
Total	$	1,947,474		$	-		$	1,947,474
	Three Months Ended December 31, 2015
	Net Sales			Eliminations **			Third Party Sales
Net sales:
Connected Car	$	736,969		$	-		$	736,969
Lifestyle Audio		641,309			(736	)		640,573
Professional Solutions		248,871			(596	)		248,275
Connected Services		153,540			(7,200	)		146,340
Other		-			-			-
Eliminations **		(8,532	)		8,532			-
Total	$	1,772,157		$	-		$	1,772,157
	Six Months Ended December 31, 2016
	Net Sales			Eliminations **			Third Party Sales
Net sales:
Connected Car	$	1,566,416		$	(22	)	$	1,566,394
Lifestyle Audio		1,333,404			(1,452	)		1,331,952
Professional Solutions		495,873			(1,503	)		494,370
Connected Services		339,979			(25,699	)		314,280
Other		-			-			-
Eliminations **		(28,676	)		28,676			-
Total	$	3,706,996		$	-		$	3,706,996
	Six Months Ended December 31, 2015
	Net Sales			Eliminations **			Third Party Sales
Net sales:
Connected Car	$	1,492,452		$	-		$	1,492,452
Lifestyle Audio		1,117,380			(1,270	)		1,116,110
Professional Solutions		495,977			(1,369	)		494,608
Connected Services		313,453			(13,617	)		299,836
Other		39			-			39
Eliminations **		(16,256	)		16,256			-
Total	$	3,403,045		$	-		$	3,403,045

 **Represents elimination of inter-segment activity.

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Significant Customers

6 Months Ended

Dec. 31, 2016

Risks And Uncertainties [Abstract]

Significant Customers

Note 19 – Significant Customers

Presented below are the percentages of net sales to, and net accounts receivables due from, customers who represent ten percent or more of our net sales or net accounts receivable, as follows:

	Net Sales						Net Sales						Accounts Receivable, Net
	Three Months Ended						Six Months Ended
	December 31,						December 31,						December 31,			June 30,
	2016			2015			2016			2015			2016			2016
BMW		11	%		11	%		12	%		13	%		6	%		9	%
Fiat Chrysler Automobiles		12	%		14	%		14	%		14	%		17	%		17	%
The Volkswagen Group		12	%		13	%		12	%		14	%		4	%		9	%
Other customers		65	%		62	%		62	%		59	%		73	%		65	%
Total		100	%		100	%		100	%		100	%		100	%		100	%

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Commitments and Contingencies

6 Months Ended

Dec. 31, 2016

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 20 – Commitments and Contingencies

At December 31, 2016, we were subject to legal claims and litigation arising in the ordinary course of business, including the matter described below. The outcome of this legal action cannot be predicted with certainty; however, management, based upon advice from legal counsel, believes such action is either without merit or will not have a material adverse effect on our financial condition, results of operations or cash flows.

In re Harman International Industries, Inc. Securities Litigation

On October 1, 2007, a purported class action lawsuit was filed by Cheolan Kim (the “Kim Plaintiff”) against Harman and certain of our officers in the United States District Court for the District of Columbia (the “Court”) seeking compensatory damages and costs on behalf of all persons who purchased our common stock between April 26, 2007 and September 24, 2007 (the “Class Period”). The original complaint alleged claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 10b-5 promulgated thereunder.

The complaint alleged that the defendants omitted to disclose material adverse facts about Harman’s financial condition and business prospects. The complaint contended that had these facts not been concealed at the time the merger agreement with Kohlberg, Kravis, Roberts & Co. and Goldman Sachs Capital Partners was entered into, there would not have been a merger agreement, or it would have been at a much lower price, and the price of our common stock therefore would not have been artificially inflated during the Class Period. The Kim Plaintiff alleged that, following the reports that the proposed merger was not going to be completed, the price of our common stock declined, causing the plaintiff class significant losses.

On November 30, 2007, the Boca Raton General Employees’ Pension Plan filed a purported class action lawsuit against Harman and certain of our officers in the Court seeking compensatory damages and costs on behalf of all persons who purchased our common stock between April 26, 2007 and September 24, 2007. The allegations in the Boca Raton complaint are essentially identical to the allegations in the original Kim complaint, and like the original Kim complaint, the Boca Raton complaint alleges claims for violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder.

On January 16, 2008, the Kim Plaintiff filed an amended complaint. The amended complaint, which extended the Class Period through January 11, 2008, contended that, in addition to the violations alleged in the original complaint, Harman also violated Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder by “knowingly failing to disclose “significant problems” relating to its PND sales forecasts, production, pricing, and inventory” prior to January 14, 2008. The amended complaint claimed that when “Defendants revealed for the first time on January 14, 2008 that shifts in PND sales would adversely impact earnings per share by more than $1.00 per share in fiscal 2008,” that led to a further decline in our share value and additional losses to the plaintiff class.

On February 15, 2008, the Court ordered the consolidation of the Kim action with the Boca Raton action, the administrative closing of the Boca Raton action, and designated the short caption of the consolidated action as In re Harman International Industries, Inc. Securities Litigation, civil action no. 1:07-cv-01757 (RWR). That same day, the Court appointed the Arkansas Public Retirement System as lead plaintiff (“Lead Plaintiff”) and approved the law firm Cohen, Milstein, Hausfeld and Toll, P.L.L.C. to serve as lead counsel.

On May 2, 2008, Lead Plaintiff filed a consolidated class action complaint (the “Consolidated Complaint”). The Consolidated Complaint, which extended the Class Period through February 5, 2008, contended that Harman and certain of our officers and directors violated Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder, by issuing false and misleading disclosures regarding our financial condition in fiscal year 2007 and fiscal year 2008. In particular, the Consolidated Complaint alleged that defendants knowingly or recklessly failed to disclose material adverse facts about MyGIG radios, personal navigation devices and our capital expenditures. The Consolidated Complaint alleged that when Harman’s true financial condition became known to the market, the price of our common stock declined significantly, causing losses to the plaintiff class.

On July 3, 2008, defendants moved to dismiss the Consolidated Complaint in its entirety. Lead Plaintiff opposed the defendants’ motion to dismiss on September 2, 2008, and defendants filed a reply in further support of their motion to dismiss on October 2, 2008.

On April 12, 2012, In re Harman International Industries, Inc. Securities Litigation, civil action no. 1:07-cv-01757 (D.D.C.) was reassigned to Judge Rudolph Contreras.

On September 5, 2012, the Court heard oral arguments on defendants’ motion to dismiss. At the request of the Court, on September 24, 2012, each side submitted a supplemental briefing on defendants’ motion to dismiss. On January 17, 2014, the Court granted a motion to dismiss, without prejudice. The Lead Plaintiff appealed this ruling to the U.S. Court of Appeals for the District of Columbia Circuit (the “Court of Appeals”) and, on June 23, 2015, the District Court’s ruling was reversed and remanded for further proceedings. On July 23, 2015, the defendants filed a motion for a rehearing en banc before the Court of Appeals, which was denied on August 26, 2015. The defendants filed a petition for a writ of certiorari seeking U.S. Supreme Court review on November 24, 2015, which was denied on February 29, 2016. Discovery in this matter is ongoing.

Connected Car Supply Arrangements

We have arrangements with our Connected Car customers to provide products that meet predetermined technical specifications and delivery dates. In the event that we do not satisfy the performance obligations under these arrangements, we may be required to indemnify the customer. We accrue for any loss that we expect to incur under these arrangements when that loss is probable and can be reasonably estimated.  For the three months ended December 31, 2016 and 2015, we did not recognize any gains or losses related to these arrangements. For the six months ended December 31, 2016 and 2015, we recognized $0.9 million of costs relating to delayed delivery of a product to a Connected Car customer and $3.9 million of gains relating to losses that we no longer expect to incur, respectively. An inability to meet performance obligations on connected car platforms to be delivered in future periods could adversely affect our results of operations, cash flows and financial condition in future periods.

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Related Party Transactions

6 Months Ended

Dec. 31, 2016

Related Party Transactions [Abstract]

Related Party Transactions

Note 21 – Related Party Transactions

Singularity University

In fiscal year 2015, we joined Singularity University’s Innovation Partnership Program, which is an innovation ecosystem for Fortune 500 companies to collaborate in the areas of technology, entrepreneurship, innovation and business strategy. In fiscal year 2015, we also purchased a Corporate Labs Membership from Singularity University (“Singularity”), providing Harman with access to educational programs, facilities and network connections. Payments to Singularity in fiscal years 2016 and 2015 totaled, in the aggregate, approximately $415,000 and $575,000, respectively. Robert Nail, who was appointed as a member of our Board of Directors on September 15, 2015, is an Associate Founder and the Chief Executive Officer of Singularity. He owns approximately 5.6% of the outstanding equity of Singularity.

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Acquisitions

6 Months Ended

Dec. 31, 2016

Business Combinations [Abstract]

Acquisitions

Note 22 – Acquisitions

TowerSec Ltd.

On March 10, 2016 (the “TowerSec Acquisition Date”), Harman Becker Automotive Systems Manufacturing Kft, our indirect wholly-owned subsidiary (“Harman Becker Kft”), acquired all of the outstanding shares of TowerSec (the “TowerSec Acquisition”), a global automotive cyber security company, for a purchase price of $45.0 million, subject to certain adjustments (the “TowerSec Adjustments”). On the TowerSec Acquisition Date we paid $37.9 million which excludes $2.3 million for an indemnification holdback and $3.0 million for a deferred consideration amount (the “Deferred Consideration Amount”). The indemnification holdback will be released following the 18 month anniversary of the TowerSec Acquisition Date, if not used.  The Deferred Consideration Amount will be released on the second anniversary of the TowerSec Acquisition Date.  Approximately $2.6 million of third-party debt was assumed and paid off at the closing. The TowerSec Adjustments were finalized during the fiscal year ended June 30, 2016 and we recorded an increase to the purchase price of approximately $0.1 million. The TowerSec Acquisition is also subject to an earn-out of up to $30.0 million, contingent on TowerSec’s achievement of certain targetsthroughMarch 10, 2019. Our preliminary estimate of the fair value of this contingent consideration liability is $27.7 million.

The total cost of the TowerSec Acquisition was allocated to the assets acquired and liabilities assumed based on their fair values at the TowerSec Acquisition Date, as follows:

	March 10, 2016
Cash and cash equivalents	$	472
Other current assets		84
Total current assets		556
Property, plant and equipment		205
Goodwill		69,438
Intangible assets		4,600
Other non-current assets		89
Total assets		74,888
Accounts payable		119
Accrued liabilities		66
Total current liabilities		185
Other non-current liabilities		3,723
Total liabilities		3,908
Net assets	$	70,980

Based on our valuation, goodwill and intangibles were recorded in connection with the TowerSec Acquisition based on third-party valuations and management’s estimates for those acquired intangible assets. Goodwill was calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. None of the goodwill recognized is deductible for tax purposes. Intangible assets include internally developed technology of $4.6 million with an approximate useful life of six years. Expenses of $0.6 million were recognized in connection with this acquisition and are included in SG&A in our Condensed Consolidated Statement of Income for the quarter ended March 31, 2016. The operating results of TowerSec are included in our condensed consolidated financial statements from the TowerSec Acquisition Date within our Connected Car segment. Pro forma financial information has not been provided as the TowerSec Acquisition is not material to our results of operations.

Southern Vision Systems, Inc.

On June 10, 2015 (the “SVSI Acquisition Date”), Harman Professional, Inc., our wholly-owned subsidiary, acquired all of the issued and outstanding shares of SVSI (the “SVSI Acquisition”), a developer, manufacturer and marketer of audio/video over internet protocol products and services, for a total purchase price of $20.0 million, subject to certain adjustments (the “SVSI Adjustments”). On the SVSI Acquisition Date we paid $19.5 million which excludes $2.4 million for certain indemnification holdbacks. During the three and six months ended December 31, 2016, the $2.4 million indemnification holdbacks were released to the sellers. The SVSI Adjustments were finalized during the three months ended September 30, 2015 and we recorded an increase to the purchase price of approximately $0.1 million. The SVSI Acquisition is also subject to an earn-out of up to $10.0 million to be paid in fiscal years 2017, 2018 and 2019, based upon the achievement of certain contribution margin targets related to the sale of certain products through fiscal year 2018. Our estimate of the fair value of this contingent consideration liability is $3.0 million at the end of the measurement period for this acquisition. During the three months ended September 30, 2016, we made a contingent consideration payment of $2.1 million related to fiscal year 2016 results. Refer to Note 14- Fair Value Measurements for more information on our ongoing evaluation of this contingent consideration liability.

Bang & Olufsen Automotive Assets

On June 1, 2015 (the “B&O Acquisition Date”), we acquired certain automotive assets and liabilities of Bang &Olufsen A/S (“B&O”), a developer of home audio systems and car audio solutions, including a perpetual exclusive license to use the Bang & Olufsen and B&O Play^® trademarks, for a total purchase price of €150.8 million (the “B&O Preliminary Purchase Price”) or approximately $165.7 million (the “B&O Acquisition”), subject to a final purchase price adjustment (the “B&O Adjustment”). On the B&O Acquisition Date, we paid the B&O Preliminary Purchase Price, of which €12.5 million was placed in escrow for certain indemnification matters. The B&O Adjustment was finalized during the three months ended September 30, 2015 and we recorded a decrease to the purchase price of approximately €0.5 million or $0.5 million. During the three months ended September 30, 2016, the €12.5 million placed in escrow was released to the sellers.

Symphony Teleca Corporation

On April 8, 2015 (the “STC Acquisition Date”), we acquired all of the outstanding shares of STC (the “STC Acquisition”), a global software services company, that provides software, engineering and integration services, for an estimated total base purchase price of $720.8 million (the “STC Purchase Price”), of which $491.5 million was paid at closing, consisting of $299.7 million in cash and $191.8 million in shares of our common stock. Approximately $115.6 million of third-party debt was assumed and paid off at closing and we also acquired $61.9 million of cash, of which $14.8 million was restricted, related to the acquisition of the remaining portion of a non-controlling interest that we did not own at the STC Acquisition Date. The STC Acquisition was subject to an earn-out which was based upon STC’s calendar year 2015 revenue. The STC Acquisition was also subject to a final base purchase price adjustment (the “Final Base Purchase Price Adjustment”) comprised of both a net debt and net working capital component which was estimated to be $0.  

During the fiscal year ended June 30, 2016, the calculation of the remainder of the STC Purchase Price and the earn-out (the “Additional Payments”) of $231.1 million and $23.3 million, respectively, and the Final Base Purchase Price Adjustment of $0 were finalized and settled in cash. There is a $42.0 million holdback related to specified indemnification matters which was withheld from our settlement of the Additional Payments. There are also holdbacks of $31.2 million and $21.0 million which were placed in separate escrow accounts to be used for other specified indemnification matters. The amounts placed in escrow or withheld from the Additional Payments will be released based on certain defined events.  

Red Bend Ltd.

On February 26, 2015 (the “Redbend Acquisition Date”), Harman Becker Kft acquired all of the outstanding shares of Redbend, a provider of software management technology for connected devices, over-the-air software and firmware upgrading services, in a cash and stock transaction valued at approximately $195.3 million (the “Redbend Acquisition”), of which $71.0 million was paid in cash and $124.3 million was paid in shares of our common stock (the “Redbend Purchase Price”), subject to certain adjustments (the “Post-Closing Adjustment”). Approximately $5.6 million of third party debt was assumed and paid off at the closing. The Redbend Acquisition is also subject to an earn-out of up to $30.0 million to be paid in the third quarter of fiscal year 2017, based upon the achievement of Redbend’s cumulative bookings target for awarded business from January 1, 2015 through December 31, 2016. Our estimate of the fair value of this contingent consideration liability is $20.9 million at the end of the measurement period. Refer to Note 14- Fair Value Measurements for more information on our ongoing evaluation of this contingent consideration liability.  Our final calculation of the Post-Closing Adjustment was $0.4 million, which was paid during the fiscal year ended June 30, 2015. Approximately $16.0 million of the Redbend Purchase Price was placed in escrow for certain indemnification matters. During the three months ended September 30, 2016, approximately $15.4 million of the amounts placed in escrow were released to the sellers.

S1nn GmbH & Co. KG

On February 1, 2015 (the “S1nn Acquisition Date”), Harman Becker Automotive Systems GmbH (“HBAS”), our indirect wholly-owned subsidiary, acquired all of the issued and outstanding shares of S1nn GmbH & Co. KG (“S1nn”), a developer of infotainment systems, connectivity and car audio solutions, for a total purchase price of €49.0 million or approximately $55.4 million, which includes €4.1 million, or approximately $4.6 million, placed in escrow for certain indemnification holdbacks. During the three months ended September 30, 2016, €2.6 million or approximately $2.9 million of the amounts placed in escrow were released to the sellers. The remaining €1.5 million or approximately $1.7 million was released to us for specified indemnification matters.

I.P.S.G./VFX

On December 30, 2014 (the “IPSG/VFX Acquisition Date”), Harman International Industries Pty. Ltd., our indirect wholly-owned subsidiary, acquired all of the outstanding shares of IPSG/VFX (the “IPSG/VFX Acquisition”), a developer, manufacturer and distributor of audio products, for an aggregate purchase price of $5.0 million, less certain adjustments determined at the IPSG/VFX Acquisition Date (the “IPSG/VFX Purchase Price”), which was paid in cash on the IPSG/VFX Acquisition Date. The IPSG/VFX Acquisition is subject to cumulative earn-outs of up to $8.0 million payable primarily based on expectations of the gross profit of IPSG/VFX (the “IPSG/VFX Contingent Consideration”). The IPSG/VFX Purchase Price and the IPSG/VFX Contingent Consideration are subject to a holdback of 15 percent payable contingent upon the outcome of certain events within 18 months of the IPSG/VFX Acquisition Date. During the three months ended September 30, 2016, a holdback of $0.7 million was released to the sellers. Our preliminary value of the IPSG/VFX Contingent Consideration liability was $0 at the end of the measurement period for this acquisition. Refer to Note 14- Fair Value Measurements for more information on our ongoing evaluation of this contingent consideration liability.

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Accounts Payable

6 Months Ended

Dec. 31, 2016

Payables And Accruals [Abstract]

Accounts Payable

Note 23 – Accounts Payable

Beginning in fiscal year 2015, we entered into an agreement with a third party to provide an accounts payable tracking system which allows participating suppliers to sell our payment obligations to designated third-party financial institutions. Participating suppliers may, at their sole discretion, make offers to sell one or more of our payment obligations prior to their scheduled due dates, at a discounted price, to participating financial institutions. Our goal in entering into this agreement is to capture overall supplier savings, in the form of pricing and payment terms, created by facilitating the supplier’s ability to sell payment obligations, while providing them with greater working capital flexibility. We have no economic interest in the sale of these suppliers’ receivables and no direct financial relationship with the financial institutions concerning these services. Our obligations to our suppliers, including amounts due and scheduled payment dates, are not impacted by a supplier’s decision to sell amounts under this arrangement; however, our right to offset balances due from suppliers against payment obligations is restricted by this agreement for those payment obligations that have been sold by suppliers. As of December 31, 2016 and June 30, 2016, $253.5 million and $316.6 million, respectively, of our outstanding payment obligations had been placed in the accounts payable tracking system, and participating suppliers had sold $103.7 million and $149.6 million, respectively, of those payment obligations to participating financial institutions.

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Subsequent Events

6 Months Ended

Dec. 31, 2016

Subsequent Events [Abstract]

Subsequent Events

Note 24 – Subsequent Events

Dividend Declaration

On January 26, 2017 we declared a cash dividend of $0.35 per share for the quarter ended December 31, 2016. The quarterly dividend will be paid on February 22, 2017 to each stockholder of record as of the close of business on February 6, 2017.

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New Accounting Standards (Policies)

6 Months Ended

Dec. 31, 2016

Accounting Changes And Error Corrections [Abstract]

Recently Adopted Accounting Standards

Recently Adopted Accounting Standards

Imputation of Interest: In August 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-15, “Interest – Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements,” which clarifies the presentation and subsequent measurement of debt issuance costs associated with lines of credit. Under the new guidance, these costs may be presented as an asset and amortized ratably over the term of the line-of-credit arrangement, regardless of whether there are outstanding borrowings on the arrangement. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued. We adopted the provisions of this new guidance on July 1, 2016 on a retrospective basis. The adoption of the new provisions did not have any impact on our financial condition or results of operations.

In April 2015, the FASB issued ASU No. 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs,” which changes the presentation requirements for debt issuance costs and debt discount and premium. The new guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the new guidance. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued. We adopted the provisions of this new guidance on July 1, 2016 on a retrospective basis. The adoption of the new provisions resulted in a reclassification of $6.2 million which reduced both Other assets and Long-term debt in our Condensed Consolidated Balance Sheets. The adoption of the new provision did not have any impact on our results of operations.

Extraordinary Items: In January 2015, the FASB issued ASU 2015-01, “Income Statement – Extraordinary and Unusual Items (Subtopic 225-20),” which eliminates the concept of extraordinary items. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2015. The new guidance is to be applied prospectively but may also be applied retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. We adopted the provisions of this new guidance on July 1, 2016. The adoption of the new provisions did not have any impact on our financial condition or results of operations.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

Business Combinations: In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2017. Early adoption is permitted for financial statements that have not been previously issued. We expect to adopt the provisions of this new guidance on July 1, 2018. The provisions in this guidance will be applied on a prospective basis. We do not expect the adoption of the new provisions to have a material impact on our financial condition or results of operations.

Income Taxes: In October 2016, the FASB issued ASU No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory,” which requires the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2017. Early adoption is permitted for financial statements that have not been previously issued. We expect to adopt the provisions of this new guidance on July 1, 2018. The provisions in this guidance will be applied on a modified retrospective basis. We are currently assessing the impact the adoption of the new provisions will have on our financial condition and results of operations.

Cash Flows: In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash" which clarifies the guidance on the classification and presentation of restricted cash in the statement of cash flows. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2017. Early adoption is permitted for financial statements that have not been previously issued. We expect to adopt the provisions of this new guidance on July 1, 2018. The provisions in this guidance will be applied on a retrospective basis. We do not expect the adoption of the new provisions to have a material impact on our statement of cash flows.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows: Clarification of Certain Cash Receipts and Cash Payments,” which eliminates the diversity in practice related to the classification of certain cash receipts and payments in the statement of cash flows, by adding or clarifying guidance on eight specific cash flow issues. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2017. Early adoption is permitted for financial statements that have not been previously issued. We expect to adopt the provisions of this new guidance on July 1, 2018. The provisions in this guidance will be applied on a retrospective basis. We are currently assessing the impact the adoption of the new provisions will have on our statement of cash flows.

Share-Based Payments: In March 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” which simplifies how share-based payments are accounted for and presented in the consolidated financial statements. The guidance amends certain income tax consequences for share-based payments, the accounting for forfeitures, the classification of share-based awards, and the classification of share-based payments in the statement of cash flows.  The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2016. Early adoption is permitted for financial statements that have not been previously issued. We expect to adopt the provisions of this new guidance on July 1, 2017. The provisions in this guidance will be applied on a prospective basis. We are currently assessing the impact the adoption of the new provisions will have on our financial condition and results of operations.

Derivatives: In March 2016, the FASB issued ASU No. 2016-05, “Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships,” which clarifies existing guidance on the designation of hedging instruments. Under the new guidance, a change in the counterparty to a derivative instrument that has been designated as a hedging instrument would not require dedesignation of that hedging relationship, provided that all other hedge accounting criteria continues to be met. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2016. Early adoption is permitted for financial statements that have not been previously issued. We expect to adopt the provisions of this new guidance on July 1, 2017. The provisions in this guidance can be applied on either a prospective basis or a modified retrospective basis. We do not expect the adoption of the new provisions to have a material impact on our financial condition or results of operations.

Leases: In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which increases transparency and comparability by requiring a lessee to record a right-of-use asset and lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification determining whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. ASU No. 2016-02 is effective for fiscal years and interim periods within those years beginning after December 15, 2018. Early adoption is permitted for financial statements that have not been previously issued. We expect to adopt the provisions of this new guidance on July 1, 2019. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are currently assessing the impact the adoption of the new provisions will have on our financial condition and results of operations.

Financial Instruments: In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,”which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2019. Early adoption is permitted for fiscal years and interim periods within those years beginning after December 15, 2018. We expect to adopt the provisions of this new guidance on July 1, 2020. We are currently assessing the impact the adoption of the new provisions will have on our financial condition and results of operations.

In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities,” which changes the guidance on the classification and measurement of financial instruments related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. It also amends certain disclosure requirements associated with the fair value of financial instruments. Under the new guidance, equity investments (excluding those accounted for under the equity method or those that result in consolidation) will be measured at fair value, with changes in fair value recognized in net income.  For financial liabilities that an entity has elected to measure at fair value in accordance with the fair value option guidance, the amendments require an entity to present separately in other comprehensive income the portion of the change in fair value that results from a change in instrument-specific credit risk. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2017. Early adoption is permitted for financial statements that have not been previously issued. We expect to adopt the provisions of this new guidance on July 1, 2018. We do not expect the adoption of the new provisions to have a material impact on our financial condition or results of operations.

Inventory: In July 2015, the FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory,” which states that inventory should be measured at the lower of cost and net realizable value. Net realizable value is defined as estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The new guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2016. We expect to adopt the provisions of this new guidance on July 1, 2017. The new guidance should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. We are currently assessing the impact the adoption of the new provisions will have on our financial condition and results of operations.

Revenue Recognition: In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” which amends the guidance for revenue recognition to replace numerous, industry-specific requirements and converges areas under this topic with those of the International Financial Reporting Standards. The new guidance implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The new guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. ASU No. 2014-09, as amended by ASU No. 2015-14, ASU No. 2016-08, ASU No. 2016-10, ASU No. 2016-12, and ASU No. 2016-20, is effective for fiscal years beginning after December 15, 2017. We expect to adopt the provisions of this new guidance on July 1, 2018. Entities can transition to the new standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. We are currently assessing the impact the adoption of the new provisions will have on our financial condition and results of operations, as well as the method of adoption.

Revenue Recognition and Derivatives: In May 2016, the FASB issued ASU No. 2016-11, “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting,”  which rescinds certain SEC comments that are codified in Topic 605 and Topic 815.  These rescissions include changes to accounting for shipping and handling fees and costs, accounting for consideration given by a vendor to a customer, and accounting to determine the nature of a host contract related to a hybrid financial instrument issued in the form of a share. ASU No. 2016-11 is effective for fiscal years beginning after December 15, 2017. We expect to adopt the provisions of this new guidance on July 1, 2018. We do not expect the adoption of the new provisions to have a material impact on our financial condition or results of operations.

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Inventories (Tables)

6 Months Ended

Dec. 31, 2016

Inventory Disclosure [Abstract]

Schedule of Inventories

At December 31, 2016 and June 30, 2016, inventories consisted of the following:

	December 31, 2016		June 30, 2016
Finished goods	$	377,954	$	303,271
Work in process		78,011		80,972
Raw materials		331,594		321,841
Inventories	$	787,559	$	706,084

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Property, Plant and Equipment, net (Tables)

6 Months Ended

Dec. 31, 2016

Property Plant And Equipment [Abstract]

Schedule of Property, Plant and Equipment, Net

Property, plant and equipment, net consisted of the following:

	Estimated Useful Lives (in Years)	December 31, 2016			June 30, 2016
Land		$	9,274		$	9,504
Buildings and improvements	1-50		265,829			269,619
Machinery and equipment	3-20		1,355,527			1,341,816
Furniture and fixtures	3-10		28,882			28,251
Property, plant and equipment, gross			1,659,512			1,649,190
Less accumulated depreciation and amortization			(1,080,473	)		(1,055,900	)
Property, plant and equipment, net		$	579,039		$	593,290

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Accrued Warranties (Tables)

6 Months Ended

Dec. 31, 2016

Guarantees [Abstract]

Schedule of Accrued Warranties

Details of our accrued warranties are as follows:

	Six Months Ended December 31,
	2016			2015
Accrued warranties, June 30,	$	178,367		$	163,331
Warranty expense		47,089			31,647
Warranty payments (cash or in-kind)		(32,106	)		(26,005	)
Other(1)		(7,694	)		(4,226	)
Accrued warranties, December 31,	$	185,656		$	164,747

⁽¹⁾ Other primarily represents foreign currency translation.

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Earnings Per Share (Tables)

6 Months Ended

Dec. 31, 2016

Earnings Per Share [Abstract]

Schedule of Calculation of Basic and Diluted Earnings per Share of Common Stock Outstanding

The following table presents the calculation of basic and diluted earnings per share of common stock outstanding:

	Three Months Ended December 31,
	2016				2015
	Basic		Diluted		Basic		Diluted
Numerator for Basic and Diluted Earnings per Share:
Net income	$	99,449	$	99,449	$	113,187	$	113,187
Net income attributable to non-controlling interest		-		-		289		289
Net income attributable to Harman International Industries,    Incorporated	$	99,449	$	99,449	$	112,898	$	112,898
Denominator for Basic and Diluted Earnings per Share:
Weighted average shares outstanding		70,986		70,986		72,079		72,079
Employee stock options		-		726		-		751
Total weighted average shares outstanding		70,986		71,712		72,079		72,830
Earnings per Share:
Earnings per share	$	1.40	$	1.39	$	1.57	$	1.55

	Six Months Ended December 31,
	2016				2015
	Basic		Diluted		Basic		Diluted
Numerator for Basic and Diluted Earnings per Share:
Net income	$	202,566	$	202,566	$	200,703	$	200,703
Net income attributable to noncontrolling interest		-		-		707		707
Net income attributable to Harman International Industries,    Incorporated	$	202,566	$	202,566	$	199,996	$	199,996
Denominator for Basic and Diluted Earnings per Share:
Weighted average shares outstanding		70,938		70,938		72,060		72,060
Employee stock options		-		572		-		489
Total weighted average shares outstanding		70,938		71,510		72,060		72,549
Earnings per Share:
Earnings per share	$	2.86	$	2.83	$	2.78	$	2.76

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Goodwill and Intangible Assets, Net (Tables)

6 Months Ended

Dec. 31, 2016

Goodwill And Intangible Assets Disclosure [Abstract]

Schedule of Changes in Carrying Amount of Goodwill

The changes in the carrying amount of goodwill by business segment for the six months ended December 31, 2016 were as follows:

	Connected Car			Lifestyle Audio			Professional Solutions			Connected Services			Total
Balance, June 30, 2016	$	164,771		$	147,977		$	385,609		$	811,922		$	1,510,279
Realignment adjustments(1)		-			9,623			-			(9,623	)		-
Balance, June 30, 2016 – adjusted		164,771			157,600			385,609			802,299			1,510,279
Acquisitions and adjustments(2)		(100	)					(5	)					(105	)
Other adjustments(3)		(4,936	)		(1,628	)		(756	)		(2,355	)		(9,675	)
Balance, December 31, 2016	$	159,735		$	155,972		$	384,848		$	799,944		$	1,500,499

⁽¹⁾ The realignment adjustments reallocate our goodwill based on our new reporting structure based on the relative fair value of each reporting unit.

⁽²⁾ Refer to Note 22—Acquisitions for more information.

⁽³⁾ The other adjustments to goodwill primarily consist of foreign currency translation adjustments.

Schedule of Intangible Assets, Net

Net intangible assets were $435.9 million and $476.3 million at December 31, 2016 and June 30, 2016, respectively, and were comprised of the following:

		December 31, 2016							June 30, 2016
	Weighted Average Amortization	Gross Carrying Amount		Accumulated Amortization			Net Amount		Gross Carrying Amount		Accumulated Amortization			Net Amount
Customer relationships	12 Years	$	386,686	$	(103,008	)	$	283,678	$	386,787	$	(75,957	)	$	310,830
Technology	6 Years		75,543		(33,946	)		41,597		75,431		(27,645	)		47,786
Patents	15 Years		7,256		(2,086	)		5,170		7,256		(1,584	)		5,672
Trade names(1)	-		100,617		(26,267	)		74,350		100,617		(26,231	)		74,386
Non-compete agreement	4 Years		3,146		(2,330	)		816		3,146		(2,060	)		1,086
Software	5 Years		44,219		(15,896	)		28,323		45,682		(11,945	)		33,737
Other	4 Years		10,491		(8,495	)		1,996		10,490		(7,703	)		2,787
Total		$	627,958	$	(192,028	)	$	435,930	$	629,409	$	(153,125	)	$	476,284

⁽¹⁾ Includes $55.7 million and $18.5 million of indefinite-lived intangible assets related to the acquisition of AMX LLC and AMX Holding Corporation (collectively “AMX”) and Martin Professional A/S, respectively.

Schedule of Amortization Expense of Intangible Assets

Amortization expense in each of the next five fiscal years and thereafter is expected to approximate the following:

2017	$	32,117
2018		59,567
2019		55,268
2020		50,194
2021		47,371
Thereafter		117,062
Total	$	361,579

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Debt (Tables)

6 Months Ended

Dec. 31, 2016

Debt Disclosure [Abstract]

Schedule of Debt

At December 31, 2016 and June 30, 2016, total debt consisted of the following:

	Fair Value at December 31, 2016 (1)			Book Value at December 31, 2016			Fair Value at June 30, 2016 (1)			Book Value at June 30, 2016
Short-term debt	$	2,832		$	2,832		$	-		$	-
4.150 Percent Senior Notes		398,480			400,000			417,440			400,000
2.000 Percent Senior Notes		388,046			368,096			390,654			388,710
Borrowings under revolving credit facility		513,000			513,000			523,000			523,000
IS Obligation (2)		52,742			52,742			82,805			82,805
Capital lease obligations		10,470			10,470			12,322			12,322
Unamortized debt discount on 4.150 Percent Senior Notes		(2,293	)		(2,293	)		(2,407	)		(2,407	)
Unamortized debt discount on 2.000 Percent Senior Notes		(1,117	)		(1,117	)		(1,283	)		(1,283	)
Unamortized Senior Note Issuance Costs		(5,754	)		(5,754	)		(6,173	)		(6,173	)
Total debt		1,356,406			1,337,976			1,416,358			1,396,974
Short-term debt		(2,832	)		(2,832	)		-			-
Current portion of long-term debt (2)		(55,543	)		(55,543	)		(86,641	)		(86,641	)
Total long-term debt	$	1,298,031		$	1,279,601		$	1,329,717		$	1,310,333

⁽¹⁾ The estimated fair value of the 2.000 Percent Senior Notes and the 4.150 Percent Senior Notes were based on a broker quotation (Level 2). Under fair value accounting guidance, Level 2 is based on 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.

⁽²⁾ Amounts due under the IS Obligation have been recorded at their present value and will be accreted to the ultimate settlement amount through the effective-interest method (Level 2).  We are required to make payments of €13 million due every July 1^st from 2017 through 2020.  Because the IS Obligation has an option, which if exercised requires us to make selected installment payments on demand, it has been included as Current portion of long-term debt.  Refer to Note 8-Goodwill and Intangible Assets, Net for more information.

Debt, Maturities in Years

At December 31, 2016, total debt maturing in each of the next five fiscal years and thereafter is as follows:

2017	$	57,362
2018		3,038
2019		2,084
2020		514,652
2021		1,472
Thereafter		768,532
Total	$	1,347,140

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Shareholders' Equity (Tables)

6 Months Ended

Dec. 31, 2016

Equity [Abstract]

Schedule of Changes in Accumulated Other Comprehensive Income and Changes in Equity

The following is a summary of the changes in Accumulated Other Comprehensive Income (“AOCI”) and changes in equity for the six months ended December 31, 2016 and 2015:

($ in thousands, except per share data)	Preferred Stock		Common Stock		Additional Paid-in Capital			AOCI			Retained Earnings			Treasury Stock			Total Equity
Balance, June 30, 2016	$	-	$	1,012	$	1,410,765		$	(77,241	)	$	2,490,570		$	(1,372,633	)	$	2,452,473
Net income		-		-		-			-			202,566			-			202,566
Other comprehensive    income, net of tax		-		-					(23,689	)		-			-			(23,689	)
Exercise of stock options		-		5		7,484			-			-			-			7,489
Repurchases related to share-    based compensation    arrangements		-		-		(14,930	)		-			-			-			(14,930	)
Share-based compensation, net		-		-		30,058			-			-			-			30,058
Excess tax benefit from share-    based compensation		-		-		27,309			-			-			-			27,309
Treasury stock repurchases		-		-		-			-			-			(55,168	)		(55,168	)
Dividends ($0.35 per share)		-		-		-			-			(49,649	)		-			(49,649	)
Balance, December 31, 2016	$	-	$	1,017	$	1,460,686		$	(100,930	)	$	2,643,487		$	(1,427,801	)	$	2,576,459

($ in thousands, except per share data)	Preferred Stock		Common Stock		Additional Paid-in Capital			AOCI			Retained Earnings			Treasury Stock			Total Harman International Industries, Incorporated Shareholders’ Equity			Non Controlling Interest			Total Equity
Balance, June 30, 2015	$	-	$	1,007	$	1,365,257		$	11,434		$	2,229,517		$	(1,232,602	)	$	2,374,613		$	18,213		$	2,392,826
Net income		-		-		-			-			199,996			-			199,996			707			200,703
Other comprehensive    income, net of tax		-		-		-			(45,245	)		-			-			(45,245	)		-			(45,245	)
Exercise of stock options		-		4		5,527			-			-			-			5,531			-			5,531
Repurchases related to    share-based compensation    arrangements		-		-		(11,861	)		-			-			-			(11,861	)		-			(11,861	)
Share-based    compensation, net		-		-		20,941			-			-			-			20,941			-			20,941
Excess tax benefit from    share-based compensation		-		-		1,958			-			-			-			1,958			-			1,958
Treasury stock repurchases		-		-		-			-			-			(50,009	)		(50,009	)		-			(50,009	)
Dividends ($0.35 per share)		-		-		-			-			(50,382	)		-			(50,382	)		-			(50,382	)
Non-controlling interest		-		-		-			-			-			-			-			(4	)		(4	)
Balance, December 31, 2015	$	-	$	1,011	$	1,381,822		$	(33,811	)	$	2,379,131		$	(1,282,611	)	$	2,445,542		$	18,916		$	2,464,458

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Share-Based Compensation (Tables)

6 Months Ended

Dec. 31, 2016

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Stock Option Activity

A summary of option activity under the Plans as of December 31, 2016 and changes during the six months ended December 31, 2016 is presented below:

	Shares			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at June 30, 2016		667,579		$	73.30		4.57	$	8,044
Granted		-			-
Exercised		(164,636	)		56.30
Forfeited or expired		(43,220	)		112.24
Outstanding at December 31, 2016		459,723		$	75.73		3.70	$	17,373
Exercisable at December 31, 2016		458,166		$	75.56		3.69	$	17,371

Schedule of Non-vested Restricted Stock Unit Activity

A summary of equity classified restricted stock unit activity as of December 31, 2016 and changes during the six months ended December 31, 2016 is presented below:

	Restricted Stock Units
Nonvested at June 30, 2016		1,494,947
Granted		940,301
Vested		(528,674	)
Forfeited		(125,880	)
Non-vested at December 31, 2016		1,780,694

Summary of Cash-Settled Stock Appreciation Rights

A summary of cash-settled stock appreciation rights as of December 31, 2016 and changes during the six months ended December 31, 2016 is presented below:

	Stock Appreciation Rights
Non-vested at June 30, 2016		4,342
Granted		1,853
Vested		(2,707	)
Forfeited		0
Non-vested at December 31, 2016		3,488
Exercisable		2,310

Schedule of Fair Value of Each Stock Appreciation Right Award Estimated on Date of Grant Using Black-Scholes Option Valuation Model

The fair value of each stock appreciation right award is estimated on the date of grant using the Black-Scholes option valuation model, which uses the assumptions noted below.

	Six Months Ended December 31, 2016		Six Months Ended December 31, 2015
Expected volatility	36.8-38.8%		35.4-39.0%
Weighted-average volatility		38.1%		37.5%
Expected annual dividend	$ 1.40		$ 1.40
Expected term (in years)	3.44-5.44		2.56-4.56
Risk-free rate	0.9-1.3%		1.1-1.6%

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Derivatives (Tables)

6 Months Ended

Dec. 31, 2016

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Schedule of Outstanding Foreign Exchange Contracts, Primarily Forward Contracts

At December 31, 2016 and June 30, 2016, we had outstanding foreign exchange contracts, primarily forward contracts, which are summarized below:

	December 31, 2016					June 30, 2016
	Gross Notional Value		Fair Value Asset/ (Liability)(1)			Gross Notional Value		Fair Value Asset/ (Liability)(1)
Currency Hedged (Buy/Sell):
U.S. Dollar/Euro	$	1,099,086	$	157,961		$	1,516,094	$	149,901
Indian Rupee/U.S. Dollar		260,200		7,068			251,355		(721	)
U.S. Dollar/Chinese Yuan		158,071		961			-		-
Euro/U.S. Dollar		140,579		(8,424	)		224,921		(6,280	)
Chinese Yuan/U.S. Dollar		25,486		(954	)		-		-
Mexican Peso/U.S. Dollar		16,519		(271	)		-		-
GBP/Euro		8,939		(95	)		-		-
Euro/Russian Rubles		8,125		(526	)		3,601		(667	)
U.S. Dollar/Russian Rubles		4,712		(590	)		9,517		(478	)
U.S. Dollar/Brazilian Real		3,863		(652	)		20,958		(2,459	)
U.S. Dollar/Australian Dollar		-		-			745		(37	)
Total	$	1,725,580	$	154,478		$	2,027,191	$	139,259

⁽¹⁾ Represents the net receivable included in our Condensed Consolidated Balance Sheets within Other current assets, Other assets, Accrued liabilities and Other non-current liabilities, as applicable.

Summary of Fair Value Amounts of Derivative Instruments

The following tables provide a summary of the fair value amounts of our derivative instruments as of December 31, 2016 and June 30, 2016:

		Fair Value
Derivatives Designated as Cash Flow Hedges, Gross:	Balance Sheet Location	December 31, 2016		June 30, 2016
Other assets:
Foreign exchange contracts	Other current assets	$	93,467	$	69,122
Foreign exchange contracts	Other assets		52,375		67,232
Total assets			145,842		136,354
Other liabilities:
Foreign exchange contracts	Accrued liabilities	$	1,887	$	3,482
Foreign exchange contracts	Other non-current liabilities		2,232		993
Total liabilities			4,119		4,475
Net asset for derivatives designated as    hedging instruments		$	141,723	$	131,879
Derivatives Designated as Economic Hedges, Gross:
Other assets:
Foreign exchange contracts	Other current assets	$	21,217	$	14,761
Foreign exchange contracts	Other assets		251		345
Total assets			21,468		15,106
Other liabilities:
Foreign exchange contracts	Accrued liabilities	$	8,187	$	5,763
Foreign exchange contracts	Other non-current liabilities		526		1,963
Total liabilities			8,713		7,726
Net asset for economic hedges		$	12,755	$	7,380
Total net derivative asset		$	154,478	$	139,259

Schedule of the Activity for Derivatives Instruments Designated as Cash Flow Hedges

The following tables summarize the activity of our derivative instruments designated as cash flow hedges for the three months ended December 31, 2016 and 2015:

Derivative	Location of Derivative Gain/(Loss) Recognized in Income	Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)						Gain/(Loss) Recognized in Income on Derivatives (Ineffective Portion)						Gain/(Loss) from Amounts Excluded from Effectiveness Testing
		Three Months Ended December 31,
		2016			2015			2016			2015			2016		2015
Foreign exchange contracts	Cost of sales	$	22,065		$	21,042		$	(94	)	$	(88	)	$	-	$	-
Foreign exchange contracts	SG&A		(93	)		24			-			-			-		-
Foreign exchange contracts	Foreign exchange losses (gains), net		(3,953	)		-			-			-			-		(3	)
Interest rate lock	Interest expense, net		(6	)		(5	)		-			-			-		-
Total cash flow hedges		$	18,013		$	21,061		$	(94	)	$	(88	)	$	-	$	(3	)

Derivative	Gain/(Loss) Recognized in AOCI (Effective Portion)
	Three Months Ended December 31,
	2016		2015
Foreign exchange contracts	$	55,613	$	41,467

The following tables summarize the activity of our derivative instruments designated as cash flow hedges for the six months ended December 31, 2016 and 2015:

Derivative	Location of Derivative Gain/(Loss) Recognized in Income	Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)						Gain/(Loss) Recognized in Income on Derivatives (Ineffective Portion)					Gain/(Loss) from Amounts Excluded from Effectiveness Testing
		Six Months Ended December 31,
		2016			2015			2016		2015			2016		2015
Foreign exchange contracts	Cost of sales	$	42,158		$	43,299		$	111	$	(116	)	$		$	-
Foreign exchange contracts	SG&A		(80	)		24			-		-			-		-
Foreign exchange contracts	Foreign exchange losses (gains), net		(3,335	)		-			-		-			-		(1	)
Interest rate lock	Interest expense, net		(11	)		(10	)		-		-			-		-
Total cash flow hedges		$	38,732		$	43,313		$	111	$	(116	)	$	-	$	(1	)

Derivative	Gain/(Loss) Recognized in AOCI (Effective Portion)
	Six months ended December 31,
	2016		2015
Foreign exchange contracts	$	53,944	$	51,448

Summary of Gains and Losses from Derivative Instruments that are Not Designated as Hedging Instruments

The following table summarizes gains and losses from our derivative instruments that are not designated as hedging instruments for the three and six months ended December 31, 2016 and 2015:

	Location of Derivative Gain/(Loss)	Three Months Ended December 31,					Six Months Ended December 31,
Derivative	Recognized in Income	2016			2015		2016			2015
Foreign exchange contracts	Cost of sales	$	8,686		$	3,605	$	7,375		$	4,489
Foreign exchange contracts	Foreign exchange losses (gains), net		(5,266	)		2,963		(4,948	)		(3,479	)
Foreign exchange contracts	SG&A		(24	)		-		(26	)		-

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Fair Value Measurements (Tables)

6 Months Ended

Dec. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value Hierarchy for Assets and Liabilities Measured on Recurring Basis

The following table provides the fair value hierarchy for assets and liabilities measured on a recurring basis.

	Fair Value at December 31, 2016							Fair Value at June 30, 2016
Description	Level 1		Level 2		Level 3			Level 1		Level 2		Level 3
Assets/(Liabilities)
Available-for-sale securities	$	55,907	$	-	$	15,000		$	54,447	$	-	$	-
Foreign exchange contracts		-		154,478		-			-		139,259		-
Pension assets		2,927		-		-			3,090		-		-
Contingent consideration		-		-		(63,806	)		-		-		(50,727	)
Net asset/(liability)	$	58,834	$	154,478	$	(48,806	)	$	57,537	$	139,259	$	(50,727	)

	Total Gains (Losses) for the Three Months Ended December 31,						Total Gains (Losses) for the Six months ended December 31,
Description of Liability	2016			2015			2016			2015
Contingent Consideration	$	(3,746	)	$	(457	)	$	(15,332	)	$	(914	)

Carrying Value for Assets and Liabilities Measured on Non-Recurring Basis under Level 3 of Fair Value Hierarchy and Losses Recorded During Periods Presented

The following table provides the carrying value for assets and liabilities measured on a non-recurring basis, all of which are measured under Level 3 of the fair value hierarchy, and the losses recorded during the periods presented. There were no gains or losses recognized in the three and six months ended December 31, 2016 and 2015.

Description of Assets	December 31, 2016		June 30,2016
Equity method investments	$	1,950	$	1,175
Goodwill		1,500,499		1,510,279
Long-lived assets		1,014,969		1,069,574
Total	$	2,517,418	$	2,581,028

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Other Comprehensive Income (Loss) (Tables)

6 Months Ended

Dec. 31, 2016

Equity [Abstract]

Schedule of Other Comprehensive Income (Loss)

Other comprehensive income (loss) is comprised of the following:

	Three Months Ended December 31, 2016						Three Months Ended December 31, 2015						Six Months Ended December 31, 2016						Six Months Ended December 31, 2015
	Pre-Tax			Net of Tax			Pre-Tax			Net of Tax			Pre-Tax			Net of Tax			Pre-Tax			Netof Tax
Foreign currency translation    losses	$	(46,751	)	$	(46,751	)	$	(19,924	)	$	(19,924	)	$	(43,360	)	$	(43,360	)	$	(53,247	)	$	(53,247	)
Changes in hedging derivatives:
Reclassifications from AOCI into    income (effective portion)(1)		(22,065	)		(19,285	)		(21,042	)		(16,737	)		(42,158	)		(41,528	)		(43,299	)		(35,656	)
Reclassifications from AOCI into    income (effective portion)(2)		93			81			(24	)		(19	)		80			79			(24	)		(20	)
Reclassifications from AOCI into    income (effective portion)(3)		6			5			5			4			11			9			10			8
Reclassifications from AOCI into    income (effective portion)(6)		3,953			3,455			-			-			3,335			3,285			-			-
Gains recognized in AOCI (effective portion)		55,613			48,606			41,467			32,984			53,944			53,138			51,448			42,367
Other gains		669			585			87			69			675			665			23			19
Change in hedging derivatives		38,269			33,447			20,493			16,301			15,887			15,648			8,158			6,718
Pension liability adjustment:
Amortization of prior service cost(4)		214			152			247			166			428			301			494			347
Amortization of net loss(4)		1,029			732			1,309			878			2,081			1,464			2,624			1,842
Expected return on plan assets(4)		(27	)		(19	)		(31	)		(21	)		(55	)		(39	)		(62	)		(44	)
Other gains (losses) (5)		3,013			2,145			1,483			995			2,480			1,749			(1,154	)		(810	)
Pension liability adjustment		4,229			3,010			3,008			2,018			4,934			3,475			1,902			1,335
Unrealized (losses) gains on    available-for-sale securities		(735	)		(468	)		53			34			857			548			(81	)		(51	)
Other comprehensive (loss) income		(4,988	)		(10,762	)		3,630			(1,571	)		(21,682	)		(23,689	)		(43,268	)		(45,245	)
Other comprehensive (loss) income    attributable to Harman International    Industries, Incorporated	$	(4,988	)	$	(10,762	)	$	3,630		$	(1,571	)	$	(21,682	)	$	(23,689	)	$	(43,268	)	$	(45,245	)

⁽¹⁾ Reclassified to Cost of sales in our Condensed Consolidated Statements of Income. Refer to Note 13 – Derivatives for more information.

⁽²⁾ Reclassified to SG&A in our Condensed Consolidated Statements of Income. Refer to Note 13 – Derivatives for more information.

⁽³⁾ Reclassified to Interest expense, net in our Condensed Consolidated Statements of Income. Refer to Note 13 – Derivatives for more information.

⁽⁴⁾ Reclassified to SG&A in our Condensed Consolidated Statements of Income. Refer to Note 17 – Retirement Benefits for more information.

⁽⁵⁾ Primarily represents currency impact on cumulative amount of benefit plan net actuarial losses and prior service credits included in AOCI.

⁽⁶⁾ Reclassified to Foreign exchange losses (gains), net in our Condensed Consolidated Statements of Income. Refer to Note 13–Derivatives for more information.

Schedule of Accumulated Other Comprehensive Income Loss

AOCI: At December 31, 2016 and June 30, 2016 AOCI consisted of the following:

Income/(Loss):	December 31, 2016			June 30, 2016
Cumulative translation adjustment	$	(165,378	)	$	(122,018	)
Pension liability adjustment		(54,970	)		(58,445	)
Unrealized gains on hedging derivatives		119,539			103,891
Unrealized losses on available-for-sale securities		(121	)		(669	)
Total AOCI	$	(100,930	)	$	(77,241	)

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Restructuring Program (Tables)

6 Months Ended

Dec. 31, 2016

Restructuring And Related Activities [Abstract]

Rollforward of Restructuring Accrual

A summary and components of our restructuring initiatives are presented below and include accruals for new programs as well as revisions to estimates, both increases and decreases, to programs accrued in prior periods:

	Severance Related Costs			Third Party Contractor Termination Costs			Facility Closure and Other Related Costs			Asset Impairments(1)			Total
Liability, June 30, 2016	$	18,068		$	435		$	5,691		$	-		$	24,194
Expense(2)		30,889			843			1,308			666			33,706
Accumulated depreciation offset		-			-			-			(666	)		(666	)
Payments		(7,660	)		-			(1,723	)					(9,383	)
Foreign currency translation		(477	)		9			5						(463	)
Liability, December 31, 2016	$	40,820		$	1,287		$	5,281		$	-		$	47,388
Liability, June 30, 2015	$	60,789		$	-		$	4,590		$	-		$	65,379
Expense(2)		1,112			372			629			3,964			6,077
Accumulated depreciation offset		-			-			-			(3,964	)		(3,964	)
Payments		(26,924	)		-			(1,130	)		-			(28,054	)
Foreign currency translation		(1,041	)		(7	)		2			-			(1,046	)
Liability, December 31, 2015	$	33,936		$	365		$	4,091		$	-		$	38,392

⁽¹⁾ Credits related to restructuring charges for accelerated depreciation and inventory provisions are recorded against the related assets in Property, plant and equipment, net or Inventories in our Condensed Consolidated Balance Sheets and do not impact the restructuring liability.

⁽²⁾ Restructuring expenses noted above are primarily in SG&A in our Condensed Consolidated Statements of Income. Asset impairments which consist of accelerated depreciation and inventory provisions are primarily in Cost of sales in our Condensed Consolidated Statements of Income.

Restructuring Expenses by Reporting Business Segment

Restructuring expenses by reporting business segment are presented below:

	Three Months Ended December 31,					Six Months Ended December 31,
	2016		2015			2016		2015
Connected Car	$	18,832	$	(443	)	$	20,245	$	(1,237	)
Lifestyle Audio		711		867			3,331		1,174
Professional Solutions		243		2,522			8,716		2,176
Connected Services		680		-			748		-
Other		-		-			-		-
Total		20,466		2,946			33,040		2,113
Asset Impairments		598		1,940			666		3,964
Total	$	21,064	$	4,886		$	33,706	$	6,077

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Retirement Benefits (Tables)

6 Months Ended

Dec. 31, 2016

Compensation And Retirement Disclosure [Abstract]

Components of Net Periodic Benefit Costs

The following table presents the components of net periodic benefit cost for the three and six months ended December 31, 2016 and 2015:

	Three Months Ended December 31,						Six Months Ended December 31,
	2016			2015			2016			2015
Service cost	$	1,599		$	1,405		$	3,253		$	2,839
Interest cost		1,207			1,714			2,433			3,441
Expected return on plan assets		(27	)		(31	)		(55	)		(62	)
Amortization of prior service cost		214			247			428			494
Amortization of net loss		1,029			1,309			2,081			2,624
Curtailments and settlements		-			(90	)		-			(182	)
Net periodic benefit cost	$	4,022		$	4,554		$	8,140		$	9,154

XML

Business Segment Data (Tables)

6 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Schedule of Report for Net Sales and Operating Income (Loss) by Each Reporting Segment

The following tables report Net sales and Operating income (loss) by each reporting segment for the three and six months ended December 31, 2016 and 2015:

	Three Months Ended December 31,						Six Months Ended December 31,
	2016			2015			2016			2015
Net sales:
Connected Car	$	769,299		$	736,969		$	1,566,416		$	1,492,452
Lifestyle Audio		765,022			641,309			1,333,404			1,117,380
Professional Solutions		255,650			248,871			495,873			495,977
Connected Services		173,308			153,540			339,979			313,453
Other		-			-			-			39
Eliminations **		(15,805	)		(8,532	)		(28,676	)		(16,256	)
Total	$	1,947,474		$	1,772,157		$	3,706,996		$	3,403,045
Operating income (loss):
Connected Car	$	76,958		$	84,266		$	171,876		$	171,485
Lifestyle Audio		125,798			83,018			204,480			130,271
Professional Solutions		10,228			23,952			21,910			49,637
Connected Services		19,629			4,865			21,192			10,496
Other		(58,599	)		(36,948	)		(94,633	)		(71,269	)
Total	$	174,014		$	159,153		$	324,825		$	290,620

	Three Months Ended December 31, 2016
	Net Sales			Eliminations **			Third Party Sales
Net sales:
Connected Car	$	769,299		$	(6	)	$	769,293
Lifestyle Audio		765,022			(762	)		764,260
Professional Solutions		255,650			(1,020	)		254,630
Connected Services		173,308			(14,017	)		159,291
Other		-			-			-
Eliminations **		(15,805	)		15,805			-
Total	$	1,947,474		$	-		$	1,947,474
	Three Months Ended December 31, 2015
	Net Sales			Eliminations **			Third Party Sales
Net sales:
Connected Car	$	736,969		$	-		$	736,969
Lifestyle Audio		641,309			(736	)		640,573
Professional Solutions		248,871			(596	)		248,275
Connected Services		153,540			(7,200	)		146,340
Other		-			-			-
Eliminations **		(8,532	)		8,532			-
Total	$	1,772,157		$	-		$	1,772,157
	Six Months Ended December 31, 2016
	Net Sales			Eliminations **			Third Party Sales
Net sales:
Connected Car	$	1,566,416		$	(22	)	$	1,566,394
Lifestyle Audio		1,333,404			(1,452	)		1,331,952
Professional Solutions		495,873			(1,503	)		494,370
Connected Services		339,979			(25,699	)		314,280
Other		-			-			-
Eliminations **		(28,676	)		28,676			-
Total	$	3,706,996		$	-		$	3,706,996
	Six Months Ended December 31, 2015
	Net Sales			Eliminations **			Third Party Sales
Net sales:
Connected Car	$	1,492,452		$	-		$	1,492,452
Lifestyle Audio		1,117,380			(1,270	)		1,116,110
Professional Solutions		495,977			(1,369	)		494,608
Connected Services		313,453			(13,617	)		299,836
Other		39			-			39
Eliminations **		(16,256	)		16,256			-
Total	$	3,403,045		$	-		$	3,403,045

 **Represents elimination of inter-segment activity.

XML

Significant Customers (Tables)

6 Months Ended

Dec. 31, 2016

Risks And Uncertainties [Abstract]

Schedule of Percentage of Net Sales and Net Accounts Receivable Due from Customers

Presented below are the percentages of net sales to, and net accounts receivables due from, customers who represent ten percent or more of our net sales or net accounts receivable, as follows:

	Net Sales						Net Sales						Accounts Receivable, Net
	Three Months Ended						Six Months Ended
	December 31,						December 31,						December 31,			June 30,
	2016			2015			2016			2015			2016			2016
BMW		11	%		11	%		12	%		13	%		6	%		9	%
Fiat Chrysler Automobiles		12	%		14	%		14	%		14	%		17	%		17	%
The Volkswagen Group		12	%		13	%		12	%		14	%		4	%		9	%
Other customers		65	%		62	%		62	%		59	%		73	%		65	%
Total		100	%		100	%		100	%		100	%		100	%		100	%

XML

Acquisitions (Tables)

6 Months Ended

Dec. 31, 2016

TowerSec Ltd. [Member]

Schedule of Cost of Acquisition, including Fair Value of Contingent Consideration Allocated to Assets Acquired and Liabilities Assumed

The total cost of the TowerSec Acquisition was allocated to the assets acquired and liabilities assumed based on their fair values at the TowerSec Acquisition Date, as follows:

	March 10, 2016
Cash and cash equivalents	$	472
Other current assets		84
Total current assets		556
Property, plant and equipment		205
Goodwill		69,438
Intangible assets		4,600
Other non-current assets		89
Total assets		74,888
Accounts payable		119
Accrued liabilities		66
Total current liabilities		185
Other non-current liabilities		3,723
Total liabilities		3,908
Net assets	$	70,980

XML

New Accounting Standards - Additional Information (Detail) $ in Millions	Dec. 31, 2016 USD ($)
New Accounting Pronouncement, Early Adoption, Effect [Member]
New Accounting Pronouncement Early Adoption [Line Items]
Reduction in other assets and long-term debt	$ 6.2

XML

Allowance for Doubtful Accounts - Additional Information (Detail) - USD ($) $ in Millions	Dec. 31, 2016	Jun. 30, 2016
Receivables [Abstract]
Uncollectible accounts receivable	$ 17.8	$ 20.2

XML

Inventories - Schedule of Inventories (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Jun. 30, 2016
Inventory Disclosure [Abstract]
Finished goods	$ 377,954	$ 303,271
Work in process	78,011	80,972
Raw materials	331,594	321,841
Inventories	$ 787,559	$ 706,084

XML

Inventories - Additional Information (Detail) - USD ($) $ in Millions	Dec. 31, 2016	Jun. 30, 2016
Inventory Disclosure [Abstract]
Inventory reserves	$ 97.5	$ 93.9

XML

Property, Plant and Equipment, net - Schedule of Property, Plant and Equipment, Net (Detail) - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2016	Jun. 30, 2016
Property, Plant and Equipment [Line Items]
Land	$ 9,274	$ 9,504
Buildings and improvements	265,829	269,619
Machinery and equipment	1,355,527	1,341,816
Furniture and fixtures	28,882	28,251
Property, plant and equipment, gross	1,659,512	1,649,190
Less accumulated depreciation and amortization	(1,080,473)	(1,055,900)
Property, plant and equipment, net	$ 579,039	$ 593,290
Buildings and Improvements [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated Useful Lives (in Years)	1 year
Buildings and Improvements [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated Useful Lives (in Years)	50 years
Machinery and Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated Useful Lives (in Years)	3 years
Machinery and Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated Useful Lives (in Years)	20 years
Furniture and Fixtures [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated Useful Lives (in Years)	3 years
Furniture and Fixtures [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated Useful Lives (in Years)	10 years

XML

Property, Plant and Equipment, net - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Property Plant And Equipment [Abstract]
Depreciation expense	$ 37.4	$ 35.0	$ 73.1	$ 70.8

XML

Accrued Warranties - Schedule of Accrued Warranties (Detail) - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Commitments And Contingencies Disclosure [Abstract]
Accrued warranties, beginning of year	$ 178,367	$ 163,331
Warranty expense	47,089	31,647
Warranty payments (cash or in-kind)	(32,106)	(26,005)
Other	(7,694)	(4,226)
Accrued warranties, end of year	$ 185,656	$ 164,747

XML

Earnings Per Share - Schedule of Calculation of Basic and Diluted Earnings per Share of Common Stock Outstanding (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Earnings Per Share [Abstract]
Net income	$ 99,449	$ 113,187	$ 202,566	$ 200,703
Net income attributable to non-controlling interest		289		707
Net income attributable to Harman International Industries, Incorporated	$ 99,449	$ 112,898	$ 202,566	$ 199,996
Weighted average shares outstanding	70,986	72,079	70,938	72,060
Employee stock options	726	751	572	489
Total weighted average shares outstanding	71,712	72,830	71,510	72,549
Earnings per share, Basic	$ 1.40	$ 1.57	$ 2.86	$ 2.78
Earnings per share, Diluted	$ 1.39	$ 1.55	$ 2.83	$ 2.76

XML

Earnings Per Share - Additional Information (Detail) - shares	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Options to Purchase Common Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common stock outstanding excluded from the computation of diluted earnings per share	154,258,000	191,519,000	154,258,000	191,519,000
Restricted Stock Units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common stock outstanding excluded from the computation of diluted earnings per share	0	0	144,535,000	263,392,000

XML

Goodwill and Intangible Assets, Net - Additional Information (Detail) € in Millions		1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 22, 2016 EUR (€) Installment	Jul. 31, 2016 EUR (€)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2016 USD ($) Unit	Dec. 31, 2015 USD ($)	Jun. 30, 2016 USD ($)	Mar. 10, 2016 USD ($)
Goodwill [Line Items]
Goodwill			$ 1,500,499,000		$ 1,500,499,000		$ 1,510,279,000
Goodwill, unfavorable foreign currency translation					9,700,000
Goodwill impairment charges			0	$ 0	0	$ 0
Net intangible assets			435,930,000		435,930,000		476,284,000
Amortization expense of intangible assets			15,200,000	$ 23,000,000	30,700,000	$ 44,100,000
Lifestyle Audio [Member]
Goodwill [Line Items]
Goodwill			$ 155,972,000		$ 155,972,000		157,600,000
Number of reporting units | Unit					2
TowerSec Ltd. [Member]
Goodwill [Line Items]
Goodwill								$ 69,438,000
Increase (Decrease) in goodwill					$ (100,000)
Innovative Systems GmbH [Member]
Goodwill [Line Items]
Loss contingency settlement agreement date					Jun. 22, 2016
Percentage of shareholders involved in contingent purchase Price	80.05%
Loss contingency settlement agreement terms					Under the terms of the agreement, we will pay the 80.05% Shareholders €76.8 million (the “IS Obligation”), with an initial payment of €24.8 million which was paid in July 2016 and four installment payments of €13 million due every July 1st from 2017 through 2020.
Remaining disputed amount | €	€ 76.8
Remaining disputed amount, initial payment paid | €		€ 24.8
Number of installments after initial payment | Installment	4
Remaining disputed amount, each installment payable | €	€ 13.0
First installment due date					Jul. 01, 2017
Final installment due date					Jul. 01, 2020
Additional contingent purchase price							$ 74,500,000
Discount percentage on early installments	8.00%						8.00%
Disputes resolved shareholders percentage	19.95%

XML

Goodwill and Intangible Assets, Net - Schedule of Changes in Carrying Amount of Goodwill (Detail) $ in Thousands	6 Months Ended
	Dec. 31, 2016 USD ($)
Goodwill [Line Items]
Goodwill, Beginning balance	$ 1,510,279
Acquisitions and adjustments	(105)
Other adjustments	(9,675)
Goodwill, Ending balance	1,500,499
Previously Reported [Member]
Goodwill [Line Items]
Goodwill, Beginning balance	1,510,279
Connected Car [Member]
Goodwill [Line Items]
Goodwill, Beginning balance	164,771
Acquisitions and adjustments	(100)
Other adjustments	(4,936)
Goodwill, Ending balance	159,735
Connected Car [Member] | Previously Reported [Member]
Goodwill [Line Items]
Goodwill, Beginning balance	164,771
Lifestyle Audio [Member]
Goodwill [Line Items]
Goodwill, Beginning balance	157,600
Other adjustments	(1,628)
Goodwill, Ending balance	155,972
Lifestyle Audio [Member] | Previously Reported [Member]
Goodwill [Line Items]
Goodwill, Beginning balance	147,977
Lifestyle Audio [Member] | Realignment adjustments [Member]
Goodwill [Line Items]
Goodwill, Beginning balance	9,623
Professional Solutions [Member]
Goodwill [Line Items]
Goodwill, Beginning balance	385,609
Acquisitions and adjustments	(5)
Other adjustments	(756)
Goodwill, Ending balance	384,848
Professional Solutions [Member] | Previously Reported [Member]
Goodwill [Line Items]
Goodwill, Beginning balance	385,609
Connected Services [Member]
Goodwill [Line Items]
Goodwill, Beginning balance	802,299
Other adjustments	(2,355)
Goodwill, Ending balance	799,944
Connected Services [Member] | Previously Reported [Member]
Goodwill [Line Items]
Goodwill, Beginning balance	811,922
Connected Services [Member] | Realignment adjustments [Member]
Goodwill [Line Items]
Goodwill, Beginning balance	$ (9,623)

XML

Goodwill and Intangible Assets, Net - Schedule of Intangible Assets, Net (Detail) - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2016	Jun. 30, 2016
Indefinite-lived Intangible Assets [Line Items]
Intangible assets, Gross Carrying Amount	$ 627,958	$ 629,409
Intangible assets, Accumulated Amortization	(192,028)	(153,125)
Intangible assets, Net Amount	$ 435,930	476,284
Customer Relationships [Member]
Indefinite-lived Intangible Assets [Line Items]
Intangible assets, Weighted Average Amortization	12 years
Intangible assets, Gross Carrying Amount	$ 386,686	386,787
Intangible assets, Accumulated Amortization	(103,008)	(75,957)
Intangible assets, Net Amount	$ 283,678	310,830
Technology [Member]
Indefinite-lived Intangible Assets [Line Items]
Intangible assets, Weighted Average Amortization	6 years
Intangible assets, Gross Carrying Amount	$ 75,543	75,431
Intangible assets, Accumulated Amortization	(33,946)	(27,645)
Intangible assets, Net Amount	$ 41,597	47,786
Patents [Member]
Indefinite-lived Intangible Assets [Line Items]
Intangible assets, Weighted Average Amortization	15 years
Intangible assets, Gross Carrying Amount	$ 7,256	7,256
Intangible assets, Accumulated Amortization	(2,086)	(1,584)
Intangible assets, Net Amount	5,170	5,672
Trade Names [Member]
Indefinite-lived Intangible Assets [Line Items]
Intangible assets, Gross Carrying Amount	100,617	100,617
Intangible assets, Accumulated Amortization	(26,267)	(26,231)
Intangible assets, Net Amount	$ 74,350	74,386
Non-Compete Agreement [Member]
Indefinite-lived Intangible Assets [Line Items]
Intangible assets, Weighted Average Amortization	4 years
Intangible assets, Gross Carrying Amount	$ 3,146	3,146
Intangible assets, Accumulated Amortization	(2,330)	(2,060)
Intangible assets, Net Amount	$ 816	1,086
Software [Member]
Indefinite-lived Intangible Assets [Line Items]
Intangible assets, Weighted Average Amortization	5 years
Intangible assets, Gross Carrying Amount	$ 44,219	45,682
Intangible assets, Accumulated Amortization	(15,896)	(11,945)
Intangible assets, Net Amount	$ 28,323	33,737
Other [Member]
Indefinite-lived Intangible Assets [Line Items]
Intangible assets, Weighted Average Amortization	4 years
Intangible assets, Gross Carrying Amount	$ 10,491	10,490
Intangible assets, Accumulated Amortization	(8,495)	(7,703)
Intangible assets, Net Amount	$ 1,996	$ 2,787

XML

Goodwill and Intangible Assets, Net - Schedule of Intangible Assets, Net (Parenthetical) (Detail) $ in Millions	6 Months Ended
	Dec. 31, 2016 USD ($)
AMX [Member]
Indefinite-lived Intangible Assets [Line Items]
Indefinite-lived intangible assets related to the acquisition	$ 55.7
Martin Professional A/S [Member]
Indefinite-lived Intangible Assets [Line Items]
Indefinite-lived intangible assets related to the acquisition	$ 18.5

XML

Goodwill and Intangible Assets, Net - Schedule of Amortization Expense of Intangible Assets (Detail) $ in Thousands	Dec. 31, 2016 USD ($)
Finite Lived Intangible Assets Future Amortization Expense [Abstract]
2017	$ 32,117
2018	59,567
2019	55,268
2020	50,194
2021	47,371
Thereafter	117,062
Total	$ 361,579

XML

Debt - Additional Information (Detail) € in Millions					1 Months Ended	3 Months Ended		6 Months Ended
	Jun. 22, 2016 EUR (€) Installment	May 27, 2015 EUR (€)	May 11, 2015 USD ($)	Mar. 26, 2015 USD ($)	Jul. 31, 2016 EUR (€)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Jun. 30, 2016 USD ($)
Debt Instrument [Line Items]
Short-term borrowings outstanding						$ 2,832,000		$ 2,832,000		$ 0
Lines of credit						47,500,000		47,500,000		53,400,000
Proceeds from the issuance of debt								80,000,000
Increase in line of credit facility				$ 500,000,000
Borrowings under the Term Facility						55,543,000		55,543,000		$ 86,641,000
Interest expense, net						9,214,000	$ 7,666,000	18,538,000	$ 15,925,000
Interest expense, gross						10,100,000	8,600,000	20,300,000	17,400,000
Non-cash portion of interest expense						900,000	700,000	1,900,000	1,400,000
Cash portion of gross interest expense						9,200,000	7,900,000	18,400,000	16,000,000
Interest income						900,000	$ 900,000	$ 1,800,000	$ 1,500,000
Innovative Systems GmbH [Member]
Debt Instrument [Line Items]
Loss contingency settlement agreement date								Jun. 22, 2016
Percentage of shareholders involved in contingent purchase Price	80.05%
Contingent purchase price settlement agreement terms								Under the terms of the agreement, we will pay the IS Obligation in accordance with the following schedule: an initial payment of €24.8 million which was paid in July 2016 and four installment payments of €13 million due every July 1st from 2017 through 2020
Remaining disputed amount, each installment payable | €	€ 13.0
Remaining disputed amount, initial payment paid | €					€ 24.8
Number of installments after initial payment | Installment	4
First installment due date								Jul. 01, 2017
Final installment due date								Jul. 01, 2020
Discount percentage on early installments	8.00%									8.00%
Multi-Currency Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Unsecured revolving credit facility, period of agreement, in years				5 years
Aggregate commitment				$ 1,200,000,000
Current borrowing capacity				750,000,000
Borrowings under the Term Facility						4,100,000		$ 4,100,000		$ 4,100,000
Unused available credit						682,900,000		682,900,000		672,900,000
Fees and other expenses						3,000,000		3,000,000
Letters of Credit [Member]
Debt Instrument [Line Items]
Aggregate commitment				$ 50,000,000
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Lines of credit						$ 513,000,000		$ 513,000,000		523,000,000
2.000 Percent Senior Notes [Member]
Debt Instrument [Line Items]
Debt instrument, interest rate						2.00%		2.00%
4.150 Percent Senior Notes [Member]
Debt Instrument [Line Items]
Debt instrument, interest rate						4.15%		4.15%
Senior Notes [Member]
Debt Instrument [Line Items]
Debt issuance cost to be amortized						$ 5,754,000		$ 5,754,000		6,173,000
Senior Notes [Member] | 2.000 Percent Senior Notes [Member]
Debt Instrument [Line Items]
Debt instrument, aggregate principal amount | €		€ 350.0
Debt instrument, interest rate		2.00%
Debt instrument, maturity date								May 27, 2022
Debt instrument, par value percentage		99.613%
Debt discount to be amortized		€ 1.4				1,117,000		$ 1,117,000		1,283,000
Debt issuance cost to be amortized | €		€ 2.6
Effective interest rate		2.06%
Proceeds from the issuance of debt | €		€ 346.0
Senior Notes [Member] | 4.150 Percent Senior Notes [Member]
Debt Instrument [Line Items]
Debt instrument, aggregate principal amount			$ 400,000,000
Debt instrument, interest rate			4.15%
Debt instrument, maturity date								May 15, 2025
Debt instrument, par value percentage			99.336%
Debt discount to be amortized			$ 2,700,000			$ 2,293,000		$ 2,293,000		$ 2,407,000
Debt issuance cost to be amortized			$ 3,800,000
Effective interest rate			4.232%
Proceeds from the issuance of debt			$ 393,500,000

XML

Debt - Schedule of Total Debt (Detail) $ in Thousands, € in Millions	Dec. 31, 2016 USD ($)	Jun. 30, 2016 USD ($)	May 27, 2015 EUR (€)	May 11, 2015 USD ($)
Debt Instrument [Line Items]
Short-term borrowings outstanding	$ 2,832	$ 0
Total debt, Book Value	1,337,976	1,396,974
Short-term debt, Book Value	(2,832)	0
Current portion of long-term debt	(55,543)	(86,641)
Total long-term debt, Book Value	1,279,601	1,310,333
Short-term debt, Fair Value	2,832
Total debt, Fair Value	1,356,406	1,416,358
Short-term debt, Fair Value	(2,832)
Total long-term debt, Fair Value	1,298,031	1,329,717
Innovative Systems GmbH [Member]
Debt Instrument [Line Items]
Total debt, Book Value	52,742	82,805
Total debt, Fair Value	52,742	82,805
Senior Notes [Member]
Debt Instrument [Line Items]
Unamortized Senior Note issuance costs	(5,754)	(6,173)
Senior Notes [Member] | 4.150 Percent Senior Notes [Member]
Debt Instrument [Line Items]
Total debt, Book Value	400,000	400,000
Unamortized debt discount	(2,293)	(2,407)		$ (2,700)
Unamortized Senior Note issuance costs				$ (3,800)
Total debt, Fair Value	398,480	417,440
Senior Notes [Member] | 2.000 Percent Senior Notes [Member]
Debt Instrument [Line Items]
Total debt, Book Value	368,096	388,710
Unamortized debt discount	(1,117)	(1,283)	€ (1.4)
Unamortized Senior Note issuance costs | €			€ (2.6)
Total debt, Fair Value	388,046	390,654
Capital Lease Obligations [Member]
Debt Instrument [Line Items]
Total debt, Book Value	10,470	12,322
Total debt, Fair Value	10,470	12,322
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Total debt, Book Value	513,000	523,000
Total debt, Fair Value	$ 513,000	$ 523,000

XML

Debt - Schedule of Total Debt (Parenthetical ) (Detail) - Innovative Systems GmbH [Member] - EUR (€) € in Millions	6 Months Ended
	Dec. 31, 2016	Jun. 22, 2016
Debt Instrument [Line Items]
Frequency of payment terms	due every July 1st from 2017 through 2020
Litigation settlement amount, each installment payable		€ 13

XML

Debt - Total Debt, Maturities in Years (Detail) $ in Thousands	Dec. 31, 2016 USD ($)
Debt Disclosure [Abstract]
2017	$ 57,362
2018	3,038
2019	2,084
2020	514,652
2021	1,472
Thereafter	768,532
Total	$ 1,347,140

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Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2014
Income Tax Disclosure [Abstract]
Income tax expense	$ 60,865	$ 33,050	$ 98,288	$ 66,600
Effective tax rate	37.90%	22.60%	32.80%	24.90%
Discrete tax charge from deemed income on foreign earnings	$ 22,700		$ 22,700		$ 1,900	$ 17,100	$ 3,700
Unrecognized tax benefits	65,600		65,600
Interest related to unrecognized tax benefits			3,000
Tax reserves on uncertain tax positions			300
Increase (decrease) in interest expense on prior year exposures of uncertain tax positions	100		$ 200
Tax reserves decreased primarily due to foreign currency translation	$ 100

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Shareholders' Equity - Additional Information (Detail) - USD ($)		3 Months Ended		6 Months Ended
	Oct. 28, 2014	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Jun. 30, 2016
Schedule Of Stockholders Equity [Line Items]
Preferred stock, shares outstanding		0		0		0
Preferred stock, shares authorized		5,000,000		5,000,000		5,000,000
Preferred stock, par value		$ 0.01		$ 0.01		$ 0.01
Common stock, shares authorized		200,000,000		200,000,000		200,000,000
Common stock, par value		$ 0.01		$ 0.01		$ 0.01
Common stock, shares issued		101,678,761		101,678,761		101,157,320
Treasury stock, shares		31,805,035		31,805,035		31,112,246
Common stock, shares outstanding		69,873,726		69,873,726		70,045,074
Repurchased shares, cost				$ 55,168,000	$ 50,009,000
2014 Buyback Program [Member]
Schedule Of Stockholders Equity [Line Items]
Shares authorized to be repurchased	$ 500,000,000
Shares authorized to be repurchased, period	3 years
Repurchased shares		241,357	123,850	692,789	494,550
Repurchased shares, cost		$ 20,000,000	$ 12,900,000	$ 55,200,000	$ 50,000,000
Cumulative buyback shares		2,324,537		2,324,537
Cumulative buyback cost		$ 195,200,000		$ 195,200,000

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Shareholders' Equity - Schedule of Changes in Accumulated Other Comprehensive Income and Changes in Equity (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Schedule Of Shareholders Equity [Line Items]
Beginning Balance			$ 2,452,473
Beginning Balance				$ 2,392,826
Net income	$ 99,449	$ 113,187	202,566	200,703
Other comprehensive income, net of tax	(10,762)	(1,571)	(23,689)	(45,245)
Exercise of stock options			7,489	5,531
Repurchases related to share-based compensation arrangements			(14,930)	(11,861)
Share-based compensation, net			30,058	20,941
Excess tax benefit from share-based compensation			27,309	1,958
Treasury stock repurchases			(55,168)	(50,009)
Dividends			(49,649)	(50,382)
Non-controlling interest				(4)
Ending Balance	2,576,459		2,576,459
Ending Balance		2,464,458		2,464,458
Common Stock [Member]
Schedule Of Shareholders Equity [Line Items]
Beginning Balance			1,012	1,007
Exercise of stock options			5	4
Ending Balance	1,017	1,011	1,017	1,011
Additional Paid-in Capital [Member]
Schedule Of Shareholders Equity [Line Items]
Beginning Balance			1,410,765	1,365,257
Exercise of stock options			7,484	5,527
Repurchases related to share-based compensation arrangements			(14,930)	(11,861)
Share-based compensation, net			30,058	20,941
Excess tax benefit from share-based compensation			27,309	1,958
Ending Balance	1,460,686	1,381,822	1,460,686	1,381,822
AOCI [Member]
Schedule Of Shareholders Equity [Line Items]
Beginning Balance			(77,241)	11,434
Other comprehensive income, net of tax			(23,689)	(45,245)
Ending Balance	(100,930)	(33,811)	(100,930)	(33,811)
Retained Earnings [Member]
Schedule Of Shareholders Equity [Line Items]
Beginning Balance			2,490,570	2,229,517
Net income			202,566	199,996
Dividends			(49,649)	(50,382)
Ending Balance	2,643,487	2,379,131	2,643,487	2,379,131
Treasury Stock [Member]
Schedule Of Shareholders Equity [Line Items]
Beginning Balance			(1,372,633)	(1,232,602)
Treasury stock repurchases			(55,168)	(50,009)
Ending Balance	$ (1,427,801)	(1,282,611)	$ (1,427,801)	(1,282,611)
Total Harman International Industries, Incorporated Shareholders' Equity [Member]
Schedule Of Shareholders Equity [Line Items]
Beginning Balance				2,374,613
Net income				199,996
Other comprehensive income, net of tax				(45,245)
Exercise of stock options				5,531
Repurchases related to share-based compensation arrangements				(11,861)
Share-based compensation, net				20,941
Excess tax benefit from share-based compensation				1,958
Treasury stock repurchases				(50,009)
Dividends				(50,382)
Ending Balance		2,445,542		2,445,542
Non Controlling Interest [Member]
Schedule Of Shareholders Equity [Line Items]
Beginning Balance, Non Controlling Interest				18,213
Net income				707
Non-controlling interest				(4)
Ending Balance, Non Controlling Interest		$ 18,916		$ 18,916

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Shareholders' Equity - Schedule of Changes in Accumulated Other Comprehensive Income and Changes in Equity (Parenthetical) (Detail) - $ / shares	6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Equity [Abstract]
Dividends, per share	$ 0.35	$ 0.35

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Share-Based Compensation - Additional Information (Detail) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Dec. 31, 2016 USD ($) shares	Dec. 31, 2015 USD ($)	Dec. 31, 2016 USD ($) award shares	Dec. 31, 2015 USD ($) shares	Jun. 30, 2014 shares	Dec. 09, 2015 shares	Dec. 04, 2013 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation | $	$ 19,900	$ 12,500	$ 30,058	$ 20,941
Total income tax benefit recognized | $	5,300	3,400	$ 7,600	$ 5,400
Number of stock options, granted			0	0
Total intrinsic value of options exercised | $	6,000	$ 2,900	$ 7,100	$ 5,300
Extended vesting period after employee termination, days			90 days
Cliff vesting period, in years			3 years	3 years	3 years
Restricted Stock Units with Earning Per Share Performance Conditions [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards granted			210,476	175,353	130,616
Restricted stock units, grant date fair value					100.00%
Restricted Stock Units with Market Conditions [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards granted			210,476	175,353	130,641
Restricted stock units, grant date fair value					78.00%
Monte Carlo Simulation [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock units, grant date fair value | $			$ 11,400	$ 12,300
Cash-Settled Stock Appreciation Rights [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards granted			1,853
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized compensation cost | $	197,900		$ 197,900
Aggregate intrinsic value of equity classified restricted stock | $	$ 97,600		$ 97,600
Weighted average recognition period, years			2 years
2012 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock Option and Incentive Plan, maturity date			Dec. 07, 2021
Additional shares available for grant						2,000,000	2,869,821
Reduction in shares available for grant for one award under the plan			100.00%
Number of awards | award			2
Awards vesting period			3 years	3 years
Shares available for grant	3,844,426		3,844,426
Number of cash-settled restricted stock units settled			2,268	869
Number of cash-settled restricted stock units, outstanding			10,260
2012 Plan [Member] | Time Vested Restricted Stock Units Cliff Vest [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards granted			6,830	5,243
Restricted stock units vesting period			3 years	3 years
2012 Plan [Member] | Time Vested Restricted Stock Units Ratably Vest [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards granted			501,440	363,788
Restricted stock units vesting period			3 years	3 years
2012 Plan [Member] | Time Vested Restricted Stock Units Cliff Vest One [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards granted			11,079	14,424
Restricted stock units vesting period			1 year	1 year
2012 Plan [Member] | Full-Value Grant [Member] | Prior to December 4, 2013 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reduction in shares available for grant for one award under the plan			171.00%
2012 Plan [Member] | Full-Value Grant [Member] | On or After December 4, 2013 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reduction in shares available for grant for one award under the plan			150.00%
2012 Plan [Member] | Option or Stock Appreciation Right Grant [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards for reduction of shares available for grant under 2012 Plan | award			1
2012 Plan [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares of our common stock under 2012 Plan						9,269,821	7,269,821
2012 Plan [Member] | Options to Purchase Common Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option awards expiration period			10 years
2012 Plan [Member] | Options to Purchase Common Stock [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards vesting period			5 years
2012 Plan [Member] | Options to Purchase Common Stock [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards vesting period			3 years
2012 Plan [Member] | Stock-Settled Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards granted			940,301
2012 Plan [Member] | Cash-Settled Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards granted			6,136	4,923
2012 Plan [Member] | Cash-Settled Stock Appreciation Rights [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards granted			1,853

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Share-Based Compensation - Summary of Stock Option Activity (Detail) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended		12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Jun. 30, 2016
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Outstanding at June 30, 2016, Shares	667,579
Granted, Shares	0	0
Exercised, Shares	(164,636)
Forfeited or expired, Shares	(43,220)
Outstanding at December 31, 2016, Shares	459,723		667,579
Exercisable at December 31, 2016, Shares	458,166
Outstanding at June 30, 2016, Weighted Average Exercise Price Per Share	$ 73.30
Exercised, Weighted Average Exercise Price Per Share	56.30
Forfeited or expired, Weighted Average Exercise Price Per Share	112.24
Outstanding at December 31, 2016, Weighted Average Exercise Price Per Share	75.73		$ 73.30
Exercisable at December 31, 2016, Weighted Average Exercise Price Per Share	$ 75.56
Outstanding, Weighted Average Remaining Contractual Term (Years)	3 years 8 months 12 days		4 years 6 months 26 days
Exercisable at December 31, 2016, Weighted Average Remaining Contractual Term (Years)	3 years 8 months 9 days
Outstanding at June 30, 2016, Aggregate Intrinsic Value	$ 8,044
Outstanding at December 31, 2016, Aggregate Intrinsic Value	17,373		$ 8,044
Exercisable at December 31, 2016, Aggregate Intrinsic Value	$ 17,371

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Share-Based Compensation - Schedule of Non-vested Restricted Stock Unit Activity (Detail) - Restricted Stock Units [Member]	6 Months Ended
	Dec. 31, 2016 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-vested at June 30, 2016, Shares	1,494,947
Granted, Shares	940,301
Vested, Shares	(528,674)
Forfeited, Shares	(125,880)
Non-vested at December 31, 2016, Shares	1,780,694

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Share-Based Compensation - Summary of Cash-Settled Stock Appreciation Rights (Detail) - Cash-Settled Stock Appreciation Rights [Member]	6 Months Ended
	Dec. 31, 2016 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-vested at June 30, 2016, Shares	4,342
Granted, Shares	1,853
Vested, Shares	(2,707)
Forfeited, Shares	0
Non-vested at December 31, 2016, Shares	3,488
Exercisable, Shares	2,310

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Share-Based Compensation - Schedule of Fair Value of Each Stock Appreciation Right Award Estimated on Date of Grant Using Black-Scholes Option Valuation Model (Detail) - $ / shares	6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility minimum	36.80%	35.40%
Expected volatility maximum	38.80%	39.00%
Weighted-average volatility	38.10%	37.50%
Expected annual dividend	$ 1.40	$ 1.40
Risk-free rate minimum	0.90%	1.10%
Risk-free rate maximum	1.30%	1.60%
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (in years)	3 years 5 months 9 days	2 years 6 months 22 days
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (in years)	5 years 5 months 9 days	4 years 6 months 22 days

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Derivatives - Additional Information (Detail) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	May 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Jun. 30, 2016
Derivative [Line Items]
Foreign exchange contracts maturity period, years				3 years
Gains (losses) reclassified from AOCI into income (effective portion), Net of Tax		$ 18,013	$ 21,061	$ 38,732	$ 43,313
2.000 Percent Senior Notes [Member]
Derivative [Line Items]
Debt instrument, interest rate		2.00%		2.00%
Interest Rate Lock [Member] | 2.000 Percent Senior Notes [Member]
Derivative [Line Items]
Debt instrument, interest rate	2.00%
Interest Expense, Net [Member]
Derivative [Line Items]
Gains (losses) reclassified from AOCI into income (effective portion), Net of Tax		$ 5	4	$ 9	8
Interest Expense, Net [Member] | Interest Rate Lock [Member]
Derivative [Line Items]
Gains (losses) reclassified from AOCI into income (effective portion), Net of Tax		(6)	(5)	$ (11)	(10)
Interest Expense, Net [Member] | Interest Rate Lock [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Derivative [Line Items]
Gains (losses) reclassified from AOCI into income (effective portion), Net of Tax	$ 100
Not Designated as Hedging Instrument [Member]
Derivative [Line Items]
Forward contracts, maturity period				2018-10
Forward contracts maturity value		277,500		$ 277,500		$ 419,100
Cash Flow Hedging [Member]
Derivative [Line Items]
Fair value of forward contracts		1,448,000		$ 1,448,000		1,608,000
Forward contracts, maturity period				2022-05
Ineffectiveness recognized		100	$ 100	$ (100)	$ 100
Amount expected to be reclassified from AOCI to earnings within the next 12 months				110,200
Cash Flow Hedging [Member] | Hedging Instruments [Member] | Designated as Hedging Instrument [Member]
Derivative [Line Items]
Fair Value Asset/(Liability) Net		141,723		141,723		131,879
Economic Hedges, Gross [Member] | Designated as Hedging Instrument [Member]
Derivative [Line Items]
Fair Value Asset/(Liability) Net		$ 12,755		$ 12,755		$ 7,380

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Derivatives - Schedule of Outstanding Foreign Exchange Contracts, Primarily Forward Contracts (Detail) - Foreign Exchange Contracts [Member] - USD ($)	Dec. 31, 2016	Jun. 30, 2016
Derivative [Line Items]
Gross Notional Value	$ 1,725,580,000	$ 2,027,191,000
Fair Value Asset/(Liability)	154,478,000	139,259,000
U.S. Dollar/Euro [Member]
Derivative [Line Items]
Gross Notional Value	1,099,086,000	1,516,094,000
Fair Value Asset/(Liability)	157,961,000	149,901,000
Indian Rupee/U.S. Dollar [Member]
Derivative [Line Items]
Gross Notional Value	260,200,000	251,355,000
Fair Value Asset/(Liability)	7,068,000	(721,000)
Euro/U.S. Dollar [Member]
Derivative [Line Items]
Gross Notional Value	140,579,000	224,921,000
Fair Value Asset/(Liability)	(8,424,000)	(6,280,000)
U.S. Dollar/Chinese Yuan [Member]
Derivative [Line Items]
Gross Notional Value	158,071,000
Fair Value Asset/(Liability)	961,000
Chinese Yuan/U.S. Dollar [Member]
Derivative [Line Items]
Gross Notional Value	25,486,000
Fair Value Asset/(Liability)	(954,000)
Mexican Peso/U.S. Dollar [Member]
Derivative [Line Items]
Gross Notional Value	16,519,000
Fair Value Asset/(Liability)	(271,000)
U.S. Dollar/Brazilian Real [Member]
Derivative [Line Items]
Gross Notional Value	3,863,000	20,958,000
Fair Value Asset/(Liability)	(652,000)	(2,459,000)
GBP/Euro [Member]
Derivative [Line Items]
Gross Notional Value	8,939,000
Fair Value Asset/(Liability)	(95,000)
Euro/Russian Rubles [Member]
Derivative [Line Items]
Gross Notional Value	8,125,000	3,601,000
Fair Value Asset/(Liability)	(526,000)	(667,000)
U.S. Dollar/Russian Rubles [Member]
Derivative [Line Items]
Gross Notional Value	4,712,000	9,517,000
Fair Value Asset/(Liability)	$ (590,000)	(478,000)
U.S. Dollar/Australian Dollar [Member]
Derivative [Line Items]
Gross Notional Value		745,000
Fair Value Asset/(Liability)		$ (37,000)

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Derivatives - Summary of Fair Value Amounts of Derivative Instruments (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Jun. 30, 2016
Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member]
Derivative [Line Items]
Fair Value Assets	$ 145,842	$ 136,354
Fair Value Liabilities	4,119	4,475
Economic Hedges, Gross [Member] | Designated as Hedging Instrument [Member]
Derivative [Line Items]
Fair Value Assets	21,468	15,106
Fair Value Liabilities	8,713	7,726
Fair Value Asset/(Liability) Net	12,755	7,380
Foreign Exchange Contracts [Member]
Derivative [Line Items]
Fair Value Asset/(Liability) Net	154,478	139,259
Hedging Instruments [Member] | Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member]
Derivative [Line Items]
Fair Value Asset/(Liability) Net	141,723	131,879
Other Current Assets [Member] | Foreign Exchange Contracts [Member] | Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member]
Derivative [Line Items]
Fair Value Assets	93,467	69,122
Other Current Assets [Member] | Foreign Exchange Contracts [Member] | Economic Hedges, Gross [Member] | Designated as Hedging Instrument [Member]
Derivative [Line Items]
Fair Value Assets	21,217	14,761
Other Noncurrent Assets [Member] | Foreign Exchange Contracts [Member] | Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member]
Derivative [Line Items]
Fair Value Assets	52,375	67,232
Other Noncurrent Assets [Member] | Foreign Exchange Contracts [Member] | Economic Hedges, Gross [Member] | Designated as Hedging Instrument [Member]
Derivative [Line Items]
Fair Value Assets	251	345
Accrued Liabilities Current [Member] | Foreign Exchange Contracts [Member] | Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member]
Derivative [Line Items]
Fair Value Liabilities	1,887	3,482
Accrued Liabilities Current [Member] | Foreign Exchange Contracts [Member] | Economic Hedges, Gross [Member] | Designated as Hedging Instrument [Member]
Derivative [Line Items]
Fair Value Liabilities	8,187	5,763
Other Non-current Liabilities [Member] | Foreign Exchange Contracts [Member] | Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member]
Derivative [Line Items]
Fair Value Liabilities	2,232	993
Other Non-current Liabilities [Member] | Foreign Exchange Contracts [Member] | Economic Hedges, Gross [Member] | Designated as Hedging Instrument [Member]
Derivative [Line Items]
Fair Value Liabilities	$ 526	$ 1,963

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Derivatives - Schedule of the Activity for Derivatives Instruments Designated as Cash Flow Hedges (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Derivative [Line Items]
Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)	$ 18,013	$ 21,061	$ 38,732	$ 43,313
Gain/(Loss) Recognized in Income on Derivatives (Ineffective Portion)	(94)	(88)	111	(116)
Gain/(Loss) from Amounts Excluded from Effectiveness Testing		(3)		(1)
Gain/(Loss) Recognized in AOCI (Effective Portion)	48,606	32,984	53,138	42,367
Cost of Sales [Member]
Derivative [Line Items]
Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)	(19,285)	(16,737)	(41,528)	(35,656)
Selling, General and Administrative Expense [Member]
Derivative [Line Items]
Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)	81	(19)	79	(20)
Foreign Exchange Losses (Gains), Net [Member]
Derivative [Line Items]
Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)	3,455		3,285
Interest Expense, Net [Member]
Derivative [Line Items]
Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)	5	4	9	8
Interest Rate Lock [Member] | Interest Expense, Net [Member]
Derivative [Line Items]
Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)	(6)	(5)	(11)	(10)
Foreign Exchange Contracts [Member]
Derivative [Line Items]
Gain/(Loss) Recognized in AOCI (Effective Portion)	55,613	41,467	53,944	51,448
Foreign Exchange Contracts [Member] | Cost of Sales [Member]
Derivative [Line Items]
Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)	22,065	21,042	42,158	43,299
Gain/(Loss) Recognized in Income on Derivatives (Ineffective Portion)	(94)	(88)	111	(116)
Foreign Exchange Contracts [Member] | Selling, General and Administrative Expense [Member]
Derivative [Line Items]
Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)	(93)	24	(80)	24
Foreign Exchange Contracts [Member] | Foreign Exchange Losses (Gains), Net [Member]
Derivative [Line Items]
Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)	$ (3,953)		$ (3,335)
Gain/(Loss) from Amounts Excluded from Effectiveness Testing		$ (3)		$ (1)

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Derivatives - Summary of Gains and Losses from Derivative Instruments that are Not Designated as Hedging Instruments (Detail) - Foreign Exchange Contracts [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Cost of Sales [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Gains and losses from derivative instruments that are not designated as hedging instruments	$ 8,686	$ 3,605	$ 7,375	$ 4,489
Foreign Exchange Losses (Gains), Net [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Gains and losses from derivative instruments that are not designated as hedging instruments	(5,266)	$ 2,963	(4,948)	$ (3,479)
Selling, General and Administrative Expense [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Gains and losses from derivative instruments that are not designated as hedging instruments	$ (24)		$ (26)

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Fair Value Measurements - Fair Value Hierarchy for Assets and Liabilities Measured on Recurring Basis (Detail) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Jun. 30, 2016
Contingent Consideration [Member]
Assets/(Liabilities)
Total Gains (Losses)	$ (3,746)	$ (457)	$ (15,332)	$ (914)
Fair Value, Inputs, Level 1 [Member]
Assets/(Liabilities)
Available-for-sale securities	55,907		55,907		$ 54,447
Pension assets	2,927		2,927		3,090
Net asset/(liability)	58,834		58,834		57,537
Fair Value, Inputs, Level 2 [Member]
Assets/(Liabilities)
Foreign exchange contracts	154,478		154,478		139,259
Net asset/(liability)	154,478		154,478		139,259
Fair Value, Inputs, Level 3 [Member]
Assets/(Liabilities)
Available-for-sale securities	15,000		15,000
Contingent consideration	(63,806)		(63,806)		(50,727)
Net asset/(liability)	$ (48,806)		$ (48,806)		$ (50,727)

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Fair Value Measurements - Additional Information (Detail) - USD ($)	1 Months Ended	3 Months Ended			6 Months Ended
	Aug. 31, 2016	Dec. 31, 2016	Sep. 30, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Jun. 30, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Purchase of convertible debt security	$ 15,000,000				$ 15,000,000
Available-for-sale debt security		$ 15,000,000			$ 15,000,000
Contractual maturity date					Aug. 18, 2018
Gains or losses recognized		0		$ 0	$ 0	$ 0
TowerSec Ltd. [Member] | Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of contingent consideration liability		27,700,000			27,700,000		$ 27,700,000
Red Bend Ltd. [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of contingent consideration liability		30,000,000			30,000,000
Red Bend Ltd. [Member] | Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of contingent consideration liability		30,000,000	$ 30,000,000		30,000,000		18,400,000
Southern Vision Systems Inc [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of contingent consideration liability		10,000,000			10,000,000
Payment towards contingent consideration liability			2,100,000
Southern Vision Systems Inc [Member] | Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of contingent consideration liability		4,700,000			4,700,000		3,000,000
Duran Audio BV [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Payment towards contingent consideration liability			$ 100,000
Duran Audio BV [Member] | Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of contingent consideration liability		1,500,000			1,500,000		1,600,000
IPSG/VFX [Member] | Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of contingent consideration liability		$ 0			$ 0		$ 0

XML

Fair Value Measurements - Carrying Value for Assets and Liabilities Measured on Non-Recurring Basis under Level 3 of Fair Value Hierarchy and Losses Recorded During Periods Presented (Detail) - Fair Value, Inputs, Level 3 [Member] - Fair Value, Measurements, Nonrecurring - USD ($) $ in Thousands	Dec. 31, 2016	Jun. 30, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity method investments	$ 1,950	$ 1,175
Goodwill	1,500,499	1,510,279
Long-lived assets	1,014,969	1,069,574
Total	$ 2,517,418	$ 2,581,028

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Other Comprehensive Income (Loss) - Schedule of Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Accumulated Other Comprehensive Income Loss [Line Items]
Foreign currency translation losses, Pre-Tax		$ (46,751)	$ (19,924)	$ (43,360)	$ (53,247)
Changes in hedging derivatives:
Gains recognized in AOCI (effective portion), Pre-Tax		55,613	41,467	53,944	51,448
Other gains, Pre-Tax		669	87	675	23
Change in hedging derivatives, Pre-Tax		38,269	20,493	15,887	8,158
Pension liability adjustment:
Pension liability adjustment, Pre-Tax		4,229	3,008	4,934	1,902
Unrealized (losses) gains on available-for-sale securities, Pre-Tax		(735)	53	857	(81)
Other comprehensive (loss) income, Pre-Tax		(4,988)	3,630	(21,682)	(43,268)
Other comprehensive (loss) income attributable to Harman International Industries, Incorporated, Pre-Tax		(4,988)	3,630	(21,682)	(43,268)
Foreign currency translation losses, Net of Tax	[1]	(46,751)	(19,924)	(43,360)	(53,247)
Changes in hedging derivatives:
Reclassifications from AOCI into income (effective portion), Net of Tax		18,013	21,061	38,732	43,313
Gains recognized in AOCI (effective portion), Net of Tax		48,606	32,984	53,138	42,367
Other gains, Net of Tax		585	69	665	19
Change in hedging derivatives, Net of Tax	[1]	33,447	16,301	15,648	6,718
Pension liability adjustment:
Pension liability adjustment, Net of Tax	[1]	3,010	2,018	3,475	1,335
Unrealized (losses) gains on available-for-sale securities, Net of Tax	[1]	(468)	34	548	(51)
Other comprehensive (loss) income, Net of Tax		(10,762)	(1,571)	(23,689)	(45,245)
Other comprehensive (loss) income attributable to Harman International Industries, Incorporated, Net of Tax	[1]	(10,762)	(1,571)	(23,689)	(45,245)
Cost of Sales [Member]
Changes in hedging derivatives:
Reclassifications from AOCI into income (effective portion), Pre-Tax		(22,065)	(21,042)	(42,158)	(43,299)
Changes in hedging derivatives:
Reclassifications from AOCI into income (effective portion), Net of Tax		(19,285)	(16,737)	(41,528)	(35,656)
Selling, General and Administrative Expense [Member]
Changes in hedging derivatives:
Reclassifications from AOCI into income (effective portion), Pre-Tax		93	(24)	80	(24)
Pension liability adjustment:
Amortization of prior service cost, Pre-Tax		214	247	428	494
Amortization of net loss, Pre-Tax		1,029	1,309	2,081	2,624
Expected return on plan assets, Pre-Tax		(27)	(31)	(55)	(62)
Changes in hedging derivatives:
Reclassifications from AOCI into income (effective portion), Net of Tax		81	(19)	79	(20)
Pension liability adjustment:
Amortization of prior service cost, Net of Tax		152	166	301	347
Amortization of net loss, Net of Tax		732	878	1,464	1,842
Expected return on plan assets, Net of Tax		(19)	(21)	(39)	(44)
Interest Expense, Net [Member]
Changes in hedging derivatives:
Reclassifications from AOCI into income (effective portion), Pre-Tax		6	5	11	10
Changes in hedging derivatives:
Reclassifications from AOCI into income (effective portion), Net of Tax		5	4	9	8
Foreign Exchange Losses (Gains), Net [Member]
Changes in hedging derivatives:
Reclassifications from AOCI into income (effective portion), Pre-Tax		3,953		3,335
Pension liability adjustment:
Other gains (losses), Pre-Tax		3,013	1,483	2,480	(1,154)
Changes in hedging derivatives:
Reclassifications from AOCI into income (effective portion), Net of Tax		3,455		3,285
Pension liability adjustment:
Other gains (losses), Net of Tax		$ 2,145	$ 995	$ 1,749	$ (810)

[1] Refer to Note 15 – Other Comprehensive Income (Loss) for more information.

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Other Comprehensive Income (Loss) - Schedule of Accumulated Other Comprehensive Income Loss (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Jun. 30, 2016
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated other comprehensive income	$ (100,930)	$ (77,241)
Cumulative Translation Adjustment [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated other comprehensive income	(165,378)	(122,018)
Pension Liability Adjustment [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated other comprehensive income	(54,970)	(58,445)
Unrealized Gains on Hedging Derivatives [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated other comprehensive income	119,539	103,891
Unrealized Losses on Available-for-Sale Securities [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated other comprehensive income	$ (121)	$ (669)

XML

Other Comprehensive Income (Loss) - Additional Information (Detail) - USD ($) $ in Millions	Dec. 31, 2016	Jun. 30, 2016
Equity [Abstract]
Investments included in Other current assets	$ 9.0	$ 8.9
Investments included in Other Non-current assets	$ 61.9	$ 45.6

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Restructuring Program - Rollforward of Restructuring Accrual (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Restructuring Cost and Reserve [Line Items]
Beginning liability			$ 24,194	$ 65,379
Expense	$ 21,064	$ 4,886	33,706	6,077
Accumulated depreciation offset			(666)	(3,964)
Payments			(9,383)	(28,054)
Foreign currency translation			(463)	(1,046)
Closing liability	47,388	38,392	47,388	38,392
Severance Related Costs [Member]
Restructuring Cost and Reserve [Line Items]
Beginning liability			18,068	60,789
Expense			30,889	1,112
Payments			(7,660)	(26,924)
Foreign currency translation			(477)	(1,041)
Closing liability	40,820	33,936	40,820	33,936
Third Party Contractor Termination Costs [Member]
Restructuring Cost and Reserve [Line Items]
Beginning liability			435
Expense			843	372
Foreign currency translation			9	(7)
Closing liability	1,287	365	1,287	365
Facility Closure and Other Related Costs [Member]
Restructuring Cost and Reserve [Line Items]
Beginning liability			5,691	4,590
Expense			1,308	629
Payments			(1,723)	(1,130)
Foreign currency translation			5	2
Closing liability	$ 5,281	$ 4,091	5,281	4,091
Asset Impairments [Member]
Restructuring Cost and Reserve [Line Items]
Expense			666	3,964
Accumulated depreciation offset			$ (666)	$ (3,964)

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Restructuring Program - Restructuring Expenses by Reporting Business Segment (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Restructuring Cost and Reserve [Line Items]
Restructuring expenses	$ 20,466	$ 2,946	$ 33,040	$ 2,113
Asset Impairments	598	1,940	666	3,964
Total	21,064	4,886	33,706	6,077
Connected Car [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring expenses	18,832	(443)	20,245	(1,237)
Lifestyle Audio [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring expenses	711	867	3,331	1,174
Professional Solutions [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring expenses	243	$ 2,522	8,716	$ 2,176
Connected Services [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring expenses	$ 680		$ 748

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Retirement Benefits - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Jun. 30, 2016
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Contributions to defined benefit pension plans	$ 2.5	$ 2.3	$ 5.1	$ 4.7
Contribution amounts expected to be paid for the remainder of the fiscal year 2017			$ 5.2
Retirement Savings Plan [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Maximum employees contribution rate, pretax			50.00%
Safe harbor non-elective contribution rate			3.00%
Matching contribution by employer			50.00%
Matching contribution rate			6.00%
Matching and profit contribution vesting rate			25.00%
SERP [Member] | Irrevocable Trust [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Retirement benefits total plan assets	94.4		$ 94.4		$ 92.7
Surrender value of life insurance policies	41.2		41.2		40.8
SERP [Member] | Irrevocable Trust [Member] | Equity and Fixed Income Mutual Funds [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Available-for-sale securities	53.2		53.2		51.8
SERP [Member] | Cash and Cash Equivalents | Irrevocable Trust [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Retirement benefits cash and cash equivalents	$ 0.0		$ 0.0		$ 0.1

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Retirement Benefits - Components of Net Periodic Benefit Cost (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Compensation And Retirement Disclosure [Abstract]
Service cost	$ 1,599	$ 1,405	$ 3,253	$ 2,839
Interest cost	1,207	1,714	2,433	3,441
Expected return on plan assets	(27)	(31)	(55)	(62)
Amortization of prior service cost	214	247	428	494
Amortization of net loss	1,029	1,309	2,081	2,624
Curtailments and settlements		(90)		(182)
Net periodic benefit cost	$ 4,022	$ 4,554	$ 8,140	$ 9,154

XML

Business Segment Data - Schedule of Report for Net Sales and Operating Income (Loss) by Each Reporting Segment (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Segment Reporting Information [Line Items]
Net sales	$ 1,947,474	$ 1,772,157	$ 3,706,996	$ 3,403,045
Operating income (loss)	174,014	159,153	324,825	290,620
Connected Car [Member]
Segment Reporting Information [Line Items]
Net sales	769,293	736,969	1,566,394	1,492,452
Lifestyle Audio [Member]
Segment Reporting Information [Line Items]
Net sales	764,260	640,573	1,331,952	1,116,110
Professional Solutions [Member]
Segment Reporting Information [Line Items]
Net sales	254,630	248,275	494,370	494,608
Connected Services [Member]
Segment Reporting Information [Line Items]
Net sales	159,291	146,340	314,280	299,836
Other [Member]
Segment Reporting Information [Line Items]
Net sales				39
Operating Segments [Member]
Segment Reporting Information [Line Items]
Net sales	1,947,474	1,772,157	3,706,996	3,403,045
Operating Segments [Member] | Connected Car [Member]
Segment Reporting Information [Line Items]
Net sales	769,299	736,969	1,566,416	1,492,452
Operating income (loss)	76,958	84,266	171,876	171,485
Operating Segments [Member] | Lifestyle Audio [Member]
Segment Reporting Information [Line Items]
Net sales	765,022	641,309	1,333,404	1,117,380
Operating income (loss)	125,798	83,018	204,480	130,271
Operating Segments [Member] | Professional Solutions [Member]
Segment Reporting Information [Line Items]
Net sales	255,650	248,871	495,873	495,977
Operating income (loss)	10,228	23,952	21,910	49,637
Operating Segments [Member] | Connected Services [Member]
Segment Reporting Information [Line Items]
Net sales	173,308	153,540	339,979	313,453
Operating income (loss)	19,629	4,865	21,192	10,496
Operating Segments [Member] | Other [Member]
Segment Reporting Information [Line Items]
Net sales				39
Operating income (loss)	(58,599)	(36,948)	(94,633)	(71,269)
Eliminations [Member]
Segment Reporting Information [Line Items]
Net sales	(15,805)	(8,532)	(28,676)	(16,256)
Eliminations [Member] | Connected Car [Member]
Segment Reporting Information [Line Items]
Net sales	(6)		(22)
Eliminations [Member] | Lifestyle Audio [Member]
Segment Reporting Information [Line Items]
Net sales	(762)	(736)	(1,452)	(1,270)
Eliminations [Member] | Professional Solutions [Member]
Segment Reporting Information [Line Items]
Net sales	(1,020)	(596)	(1,503)	(1,369)
Eliminations [Member] | Connected Services [Member]
Segment Reporting Information [Line Items]
Net sales	$ (14,017)	$ (7,200)	$ (25,699)	$ (13,617)

XML

Significant Customers - Additional Information (Detail) - Sales Revenue, Net [Member] - Customer Concentration Risk [Member]	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Concentration Risk [Line Items]
Concentration risk percentage	100.00%	100.00%	100.00%	100.00%
Minimum [Member]
Concentration Risk [Line Items]
Concentration risk percentage			10.00%

XML

Significant Customers - Schedule of Percentage of Net Sales and Net Accounts Receivable Due from Customers (Detail) - Customer Concentration Risk [Member]	3 Months Ended		6 Months Ended		12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Jun. 30, 2016
Sales Revenue, Net [Member]
Concentration Risk [Line Items]
Concentration risk percentage	100.00%	100.00%	100.00%	100.00%
Sales Revenue, Net [Member] | BMW [Member]
Concentration Risk [Line Items]
Concentration risk percentage	11.00%	11.00%	12.00%	13.00%
Sales Revenue, Net [Member] | Fiat Chrysler Automobiles [Member]
Concentration Risk [Line Items]
Concentration risk percentage	12.00%	14.00%	14.00%	14.00%
Sales Revenue, Net [Member] | The Volkswagen Group [Member]
Concentration Risk [Line Items]
Concentration risk percentage	12.00%	13.00%	12.00%	14.00%
Sales Revenue, Net [Member] | Other Customers [Member]
Concentration Risk [Line Items]
Concentration risk percentage	65.00%	62.00%	62.00%	59.00%
Accounts Receivable [Member]
Concentration Risk [Line Items]
Concentration risk percentage			100.00%		100.00%
Accounts Receivable [Member] | BMW [Member]
Concentration Risk [Line Items]
Concentration risk percentage			6.00%		9.00%
Accounts Receivable [Member] | Fiat Chrysler Automobiles [Member]
Concentration Risk [Line Items]
Concentration risk percentage			17.00%		17.00%
Accounts Receivable [Member] | The Volkswagen Group [Member]
Concentration Risk [Line Items]
Concentration risk percentage			4.00%		9.00%
Accounts Receivable [Member] | Other Customers [Member]
Concentration Risk [Line Items]
Concentration risk percentage			73.00%		65.00%

XML

Commitments and Contingencies - Additional Information (Detail) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Jan. 14, 2008
Commitments And Contingencies Disclosure [Abstract]
Adverse effect on earnings per share resulting from changing sales forecasts					$ 1.00
Gains or losses relating to contingency	$ 0	$ 0	$ 3,900	$ 3,900
Costs relating to delayed delivery of a product			$ 900	$ 900

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Related Party Transactions - Additional Information (Detail) - Singularity University [Member] - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Sep. 15, 2015
Related Party Transaction [Line Items]
Purchased corporate labs membership from related party	$ 415,000	$ 575,000
Robert Nail, a member of our Board of Directors [Member]
Related Party Transaction [Line Items]
Outstanding equity ownership percentage			5.60%

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Acquisitions - Additional Information (Detail) € in Millions										3 Months Ended						6 Months Ended		12 Months Ended
	Mar. 10, 2016 USD ($)	Jun. 10, 2015 USD ($)	Jun. 01, 2015 USD ($)	Jun. 01, 2015 EUR (€)	Apr. 08, 2015 USD ($)	Feb. 26, 2015 USD ($)	Feb. 01, 2015 USD ($)	Feb. 01, 2015 EUR (€)	Dec. 30, 2014 USD ($)	Dec. 31, 2016 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2016 EUR (€)	Mar. 31, 2016 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2015 EUR (€)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Jun. 30, 2016 USD ($)	Feb. 01, 2015 EUR (€)
Business Acquisition [Line Items]
Assumed debt paid off at closing																$ 91,193,000	$ 26,259,000
TowerSec Ltd. [Member]
Business Acquisition [Line Items]
Business acquisition date																Mar. 10, 2016
Purchase consideration, total	$ 45,000,000
Cash paid to acquire entity	37,900,000
Holdback Amounts in escrow	2,300,000
Deferred consideration amount	$ 3,000,000
Number of years expected to occur certain days	18 months
Approximately third-party debt assumed	$ 2,600,000
Increase (decrease) to purchase price																		$ 100,000
Preliminary valuation of contingent consideration	27,700,000
Acquired intangible assets	4,600,000
Goodwill amount deductible for tax purposes	0
Acquisition costs incurred													$ 600,000
TowerSec Ltd. [Member] | Internally Developed Software
Business Acquisition [Line Items]
Acquired intangible assets	$ 4,600,000
Approximate useful life	6 years
TowerSec Ltd. [Member] | Maximum [Member]
Business Acquisition [Line Items]
Acquisition earn-out contingent payable	$ 30,000,000
Southern Vision Systems Inc [Member]
Business Acquisition [Line Items]
Business acquisition date																Jun. 10, 2015
Purchase consideration, total		$ 20,000,000
Cash paid to acquire entity		19,500,000
Holdback Amounts in escrow		2,400,000
Increase (decrease) to purchase price														$ 100,000
Preliminary valuation of contingent consideration		$ 3,000,000
Escrow released to sellers										$ 2,400,000						$ 2,400,000
Acquisition earn-out contingent payable										10,000,000						$ 10,000,000
Payment towards contingent consideration liability											$ 2,100,000
Bang & Olufsen Automotive Assets [Member]
Business Acquisition [Line Items]
Business acquisition date																Jun. 01, 2015
Purchase consideration, total			$ 165,700,000	€ 150.8
Holdback Amounts in escrow | €				€ 12.5
Increase (decrease) to purchase price														$ 500,000	€ 0.5
Escrow released to sellers | €												€ 12.5
Symphony Teleca Corporation [Member]
Business Acquisition [Line Items]
Business acquisition date																Apr. 08, 2015
Purchase consideration, total					$ 720,800,000
Cash paid to acquire entity					299,700,000
Holdback Amounts in escrow																		42,000,000
Approximately third-party debt assumed					115,600,000
Estimated purchase price paid at closing					491,500,000
Number of shares of common stock to acquire entity					191,800,000
Assumed debt paid off at closing					115,600,000
Acquired of cash					61,900,000
Estimated adjustments to purchase price					0
Business combination additional payments, purchase price																		231,100,000
Business combination additional payments, earn out																		23,300,000
Final base price adjustment																		0
Symphony Teleca Corporation [Member] | Restricted Cash | Non Controlling Interest [Member]
Business Acquisition [Line Items]
Cash paid to acquire entity					$ 14,800,000
Symphony Teleca Corporation [Member] | Escrow One [Member]
Business Acquisition [Line Items]
Holdback Amounts in escrow placed other																		31,200,000
Symphony Teleca Corporation [Member] | Escrow Two [Member]
Business Acquisition [Line Items]
Holdback Amounts in escrow placed other																		$ 21,000,000
Red Bend Ltd. [Member]
Business Acquisition [Line Items]
Business acquisition date																Feb. 26, 2015
Cash paid to acquire entity						$ 71,000,000
Holdback Amounts in escrow						16,000,000
Preliminary valuation of contingent consideration						20,900,000
Escrow released to sellers											15,400,000
Acquisition earn-out contingent payable										$ 30,000,000						$ 30,000,000
Purchase price						195,300,000
Common stock shares consideration, amount						124,300,000
Acquisition, third party debt assumed and paid off						5,600,000
Post-Closing Adjustment						$ 400,000
S1nn GmbH & Co. KG [Member]
Business Acquisition [Line Items]
Business acquisition date																Feb. 01, 2015
Purchase consideration, total							$ 55,400,000	€ 49.0
Holdback Amounts in escrow							$ 4,600,000												€ 4.1
Escrow released to sellers											2,900,000	2.6
Escrow released for specified indemnification matters											1,700,000	€ 1.5
IPSG/VFX [Member] | Harman International Industries Pty Ltd [Member]
Business Acquisition [Line Items]
Business acquisition date																Dec. 30, 2014
Acquisition earn-out contingent payable									$ 0
Escrow released to sellers											$ 700,000
Purchase price									$ 5,000,000
Holdback percentage of contingent payable									15.00%
IPSG/VFX [Member] | Maximum [Member] | Harman International Industries Pty Ltd [Member]
Business Acquisition [Line Items]
Number of years expected to occur certain days									18 months
Acquisition earn-out contingent payable									$ 8,000,000

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Acquisitions - Schedule of Cost of Acquisition, including Fair Value of Contingent Consideration Allocated to Assets Acquired and Liabilities Assumed (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Jun. 30, 2016	Mar. 10, 2016
Business Acquisition [Line Items]
Goodwill	$ 1,500,499	$ 1,510,279
TowerSec Ltd. [Member]
Business Acquisition [Line Items]
Cash and cash equivalents			$ 472
Other current assets			84
Total current assets			556
Property, plant and equipment			205
Goodwill			69,438
Intangible assets			4,600
Other non-current assets			89
Total assets			74,888
Accounts payable			119
Accrued liabilities			66
Total current liabilities			185
Other non-current liabilities			3,723
Total liabilities			3,908
Net assets			$ 70,980

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Accounts Payable - Additional Information (Detail) - USD ($) $ in Millions	Dec. 31, 2016	Jun. 30, 2016
Accounts Payable Current And Noncurrent [Abstract]
Payment obligations placed in accounts payable tracking system	$ 253.5	$ 316.6
Accounts payable sold by participating suppliers to participating financial institutions	$ 103.7	$ 149.6

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Subsequent Events - Additional Information (Detail) - $ / shares		6 Months Ended
	Jan. 26, 2017	Dec. 31, 2016	Dec. 31, 2015
Subsequent Event [Line Items]
Declared cash dividend, per share		$ 0.35	$ 0.35
Subsequent Event [Member]
Subsequent Event [Line Items]
Declared cash dividend, per share	$ 0.35
Dividend payable, date to be paid	Feb. 22, 2017
Dividend payable, date of record	Feb. 06, 2017
Dividend payable, date declared	Jan. 26, 2017