Harman to Move District Staff to Connecticut

By Thomas Heath
Washington Post Staff Writer
Tuesday, January 29, 2008

Harman International Industries, the multibillion-dollar manufacturer of high-end audio equipment and electronic systems, will move its District headquarters staff to Connecticut by the end of the year, the company said yesterday.

The company this month informed its 30 or so D.C. employees that it will close its Pennsylvania Avenue office and relocate some of them to Stamford, Conn., north of New York City, where the company's new chief executive works.

"This is part of a multi-part move," said Harman spokesman Brad Hoffman. "We currently have corporate employees located in D.C.; Northridge, Calif.; and Stamford; and along with some likely cost savings, the bigger part of the picture is really an attempt to consolidate corporate functions in one location close to the New York financial markets to improve communication between these folks and our executive management team."

Hoffman said he did not know whether the company would technically keep Washington as its headquarters, or whether that designation would change.

The company has more than 11,000 employees in offices and plants around the world. It had more than $3.5 billion in sales in the fiscal year ended June 30.

Most of the D.C. employees are part of the executive team and the financial end of the firm. Some will remain in the Washington area, "if not in the Pennsylvania Avenue offices," Hoffman said.

Hoffman said he did not know whether company Chairman Sidney Harman, an author and philanthropist who is married to Rep. Jane Harman (D-Calif.), would also relocate.

Sidney Harman is president of the District-based Harman Family Foundation, which has given to such local institutions as the Washington Ballet, the Washington National Cathedral Choral Society and the Phillips Collection. He pledged $20 million for the new Harman Center for the Arts in downtown Washington, which is home to the Shakespeare Theatre Company.

"I would not be surprised if he continues to maintain a presence in the Washington area," Hoffman said.

An assistant to Harman said he was on an airplane yesterday and was unavailable for comment.

Harman International produces cutting-edge electronic equipment, including high-tech home audio systems, concert hall and movie theater sound systems, and automobile infotainment digital platforms. Its nameplates include JBL, Harman Kardon, Mark Levinson and Infinity.

The move follows several turbulent years for the company. Last April Harman negotiated a deal to sell the firm to buyout giants Kohlberg Kravis Roberts and Goldman Sachs for $8 billion, only to see the deal collapse a few months later when KKR and Goldman reneged. The deal would have allowed shareholders to maintain an interest in the company once it went private.

Harman and KKR/Goldman then reached a compromise in which the buyout firms purchased $400 million worth of Harman's senior bonds at an interest rate of 1.25 percent. The investment allowed the buyout firms to avoid paying a $225 million termination fee.

The company last year also hired a new chief executive, Dinesh Paliwal, after a year-long search. A previous chief executive, Douglas A. Pertz, was let go with a $3.8 million severance package after only four months on the job.

Paliwal has offices in Stamford, where several other Harman managers have joined him. Hoffman said the company did not have a manufacturing facility in Stamford, "but it's close to properties we have in Woodbury, Long Island, as well as smaller Harman facilities in the state of Connecticut."

Harman stock took a nosedive two weeks ago, shortly before the company cut its earnings forecast. Its shares closed at $42.37 yesterday, up 9.5 percent. The stock is down 66 percent from its 52-week high.

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