HARMAN INTERNATIONAL INDUSTRIES INC /DE/

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.

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.

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:

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.

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 a termination 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.