Exhibit 99.1

 

		Press Release
		Contact:		Sandy Rowland
		203.328.3500 sandy.rowland@harman.com

HARMAN Reports Fourth Quarter Fiscal Year 2013 Results

 

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Fourth quarter net sales up 8% to $1.182 billion; non-GAAP operating income of $87 million and EPS of $0.91

 

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Doubles dividend and increases buyback authorization by $200 million

 

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Infotainment and Lifestyle Divisions win industry innovation awards

 

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Completes restructuring of 500 FTEs in high cost countries; ~$35M savings in FY14 and beyond

 

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Additional 430 FTEs reduced with divestment of a German manufacturing operation

STAMFORD, CT, August 6, 2013 – Harman International Industries, Incorporated, the leading global infotainment and audio group (NYSE: HAR), today announced results for the fourth quarter and full year ended June 30, 2013. Net sales for the fourth quarter were $1.182 billion, an increase of eight percent compared to the same period last year, as all three of the Company’s divisions reported sales increases. Net sales increased due to the expansion of recent platform launches in the Infotainment division, growth in home and multimedia products in the Lifestyle Division, and the expansion of the Professional Division’s product portfolio into lighting and stronger professional audio sales.

Excluding restructuring and non-recurring charges, fourth quarter non-GAAP operating income was $87 million, compared to $70 million in the same period last year. On the same non-GAAP basis, earnings per diluted share were $0.91 for the quarter compared to $0.67 in the same period last year. The Company recorded restructuring and non-recurring charges of $72 million in the quarter, primarily related to the divestiture of a manufacturing operation in Germany and accrual for potential NAFTA customs duties related to prior years. This was partially offset by the release of contingent consideration related to the acquisition of MWM Acoustics. On a GAAP basis, fourth quarter operating income was $16 million, compared to $71 million in the same period last year, and earnings per diluted share were $0.08 for the quarter compared to $0.69 in the same period last year.

The Company will hold an Investor Day in New York City on Thursday, August 8, 2013 and will provide financial guidance for fiscal 2014, as well as a longer term outlook.

Dinesh C. Paliwal, the Company’s Chairman, President and CEO, said, “I am pleased that all three of our divisions reported top line growth in the quarter, which resulted in stronger bottom line performance. We had a phenomenal year for innovation, adding nearly 500 patents and patents pending bringing our intellectual property portfolio to nearly 5,000. At the same time, we continued to take actions to lower the cost base to improve both our short and long term profitability. Positive momentum in all three of our divisions, combined with a more competitive cost structure and world class innovation, positions us well as we begin fiscal 2014.”

 

FY 2013 Key Figures – Total Company		Three Months Ended June 30																Twelve Months Ended June 30
										Increase (Decrease)																Increase (Decrease)
$ millions (except per share data)		3M FY13				3M FY12				Including Currency Changes				Excluding Currency Changes1				12M FY13				12M FY12				Including Currency Changes				Excluding Currency Changes1
Net sales			1,182				1,091				8	%			8	%			4,298				4,364				(2	%)			1	%
Gross profit			285				298				(5	%)			(5	%)			1,104				1,184				(7	%)			(5	%)
Percent of net sales			24.1	%			27.4	%											25.7	%			27.1	%
SG&A & Other			269				228				18	%			18	%			903				884				2	%			4	%
Operating income			16				71				(78	%)			(79	%)			201				300				(33	%)			(31	%)
Percent of net sales			1.3	%			6.5	%											4.7	%			6.9	%
Net Income			5				49				(89	%)			(89	%)			142				330				(57	%)			(56	%)
Diluted earnings per share			0.08				0.69				(89	%)			(89	%)			2.04				4.57				(55	%)			(55	%)
Restructuring-related costs and other non-GAAP items			72				(1	)											88				9
Non-GAAP
Gross profit(1)			316				299				6	%			5	%			1,140				1,188				(4	%)			(2	%)
Percent of net sales(1)			26.7	%			27.4	%											26.5	%			27.2	%
SG&A & Other(1)			228				229				(1	%)			(1	%)			850				878				(3	%)			(1	%)
Operating income(1)			87				70				25	%			23	%			290				310				(6	%)			(4	%)
Percent of net sales(1)			7.4	%			6.4	%											6.7	%			7.1	%
Net Income(1)			63				48				32	%			29	%			214				211				2	%			4	%
Diluted earnings per share(1)			0.91				0.67				35	%			33	%			3.07				2.93				5	%			8	%
Shares outstanding – diluted (in millions)			70				72												70				72

 

1	A non-GAAP measure, see reconciliations of non-GAAP measures later in this release.

 

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Summary of Operations – Gross Margin and SG&A

Non-GAAP gross margin for the fourth quarter of fiscal 2013 decreased 70 basis points to 26.7 percent. The decline was primarily due to product mix.

SG&A expense decreased as a percentage of net sales on a non-GAAP basis in the fourth quarter of fiscal 2013 by 170 basis points to 19.3 percent. This change was primarily related to improved operating leverage on higher sales.

Investor Call Today, August 6, 2013

At 11:00 a.m. EDT today, HARMAN’s management will host an analyst and investor conference call to discuss the fourth quarter and full year results. Those who want to participate via audio in the earnings conference call should dial 1 (800) 748 2715 (U.S.) or +1 (212) 231 2919 (International) ten minutes before the call and reference HARMAN, Access Code: 21662277.

In addition, HARMAN invites you to visit the Investors section of its website at: www.harman.com where visitors can sign-up for email alerts and conveniently download copies of historical earnings releases and supporting slide presentations, among other documents. The fiscal 2013 fourth quarter earnings release and supporting materials will be posted on the site at approximately 8:00 a.m. EDT, Tuesday, August 6, 2013.

A replay of the call will also be available following its completion at approximately 1:00 p.m. EDT. The replay will be available through November 6, 2013 at 1:00 p.m. EST. To listen to the replay, dial 1 (800) 633 8284 (U.S.) or +1 (402) 977 9140 (International), Access Code: 21662277. If you need technical assistance, call the toll-free Global Crossing Customer Care Line at 1 (800) 473 0602 (U.S.) or +1 (303) 446 4604 (International).

General Information

HARMAN designs, manufactures, and markets a wide range of infotainment and audio solutions for the automotive, consumer, and professional markets. It is a recognized world leader across its customer segments with premium brands including AKG^®, Harman Kardon^®, Infinity^®, JBL^®, Lexicon^®, and Mark Levinson^® and leading-edge connectivity, safety and audio technologies. The company is admired by audiophiles across multiple generations and supports leading professional entertainers and the venues where they perform. More than 25 million automobiles on the road today are equipped with HARMAN audio and infotainment systems. HARMAN has a workforce of 14,000 people across the Americas, Europe, and Asia and reported sales of $4.3 billion for the fiscal year ended June 30, 2013. The company’s shares are traded on the New York Stock Exchange under the symbol NYSE:HAR. Please visit www.harman.com for more information.

A reconciliation of the non-GAAP measures included in this press release to the most comparable GAAP measures is provided in the tables contained at the end of this press release. HARMAN does not intend for this information to be considered in isolation or as a substitute for other measures prepared in accordance with GAAP.

Forward-Looking Information

Except for historical information contained herein, the matters discussed in this earnings release are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act. One should not place undue reliance on these statements. The Company bases these statements on particular assumptions that it has made in light of its industry experience, as well as its perception of historical trends, current market conditions, current economic data, expected future developments and other factors that the Company believes 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, including but not limited to: (1) the Company’s ability to maintain profitability in its infotainment division if there are delays in its product launches which may give rise to significant penalties and increased engineering expense; (2) the loss of one or more significant customers, or the loss of a significant platform with an automotive customer; (3) fluctuations in currency exchange rates, particularly with respect to the value of the U.S. Dollar and the Euro; (4) the Company’s ability to successfully implement its global footprint initiative, including achieving cost reductions and other benefits in connection with the restructuring of its manufacturing, engineering, procurement and administrative organizations; (5) 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; (6) the inability of the Company’s suppliers to deliver products at the scheduled rate and disruptions arising in connection therewith; (7) the Company’s ability to maintain a competitive technological advantage through innovation and leading product designs; (8) the Company’s failure to maintain the value

 

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of its brands and implementing a sufficient brand protection program; and (9) other risks detailed in Harman International Industries, Incorporated Annual Report on Form 10-K for the fiscal year ended June 30, 2012 and other filings made by the Company with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statement except as required by law.

This earnings release also makes reference to the Company’s awarded business, which represents the estimated future lifetime net sales for all customers. The Company’s future awarded business does not represent firm customer orders. The Company reports its awarded business primarily based on written award letters. The Company calculates its awarded business using various assumptions including global vehicle production forecasts, customer take rates for the Company’s products, revisions to product life cycle estimates and the impact of annual price reductions and exchange rates, among other factors. These assumptions are updated on an annual basis. The Company updates the estimates quarterly by adding the value of new awards received and subtracting sales recorded during the quarter. These quarterly updates do not include any assumptions for increased take rates, revisions to product life cycle, or any other factors.

HAR-E

 

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APPENDIX

Infotainment Division

 

FY 2013 Key Figures – Infotainment		Three Months Ended June 30																Twelve Months Ended June 30
										Increase (Decrease)																Increase (Decrease)
$ millions		3M FY13				3M FY12				Including Currency Changes				Excluding Currency Changes1				12M FY13				12M FY12				Including Currency Changes				Excluding Currency Changes1
Net sales			614				588				4	%			3	%			2,283				2,402				(5	%)			(2	%)
Gross profit			131				136				(4	%)			(5	%)			482				557				(14	%)			(11	%)
Percent of net sales			21.3	%			23.1	%											21.1	%			23.2	%
SG&A & Other			136				96				42	%			41	%			391				377				4	%			7	%
Operating income			(5	)			40				(113	%)			(113	%)			91				181				(50	%)			(49	%)
Percent of net sales			(0.9	%)			6.8	%											4.0	%			7.5	%
Restructuring-related costs and other non-GAAP items			49				(1	)											60				1
Non-GAAP
Gross profit(1)			132				137				(3	%)			(5	%)			483				561				(14	%)			(12	%)
Percent of net sales(1)			21.5	%			23.2	%											21.2	%			23.4	%
SG&A & Other(1)			88				98				(10	%)			(11	%)			332				380				(12	%)			(10	%)
Operating income(1)			44				39				14	%			9	%			151				182				(17	%)			(15	%)
Percent of net sales(1)			7.2	%			6.6	%											6.6	%			7.6	%

 

1	A non-GAAP measure, see reconciliations of non-GAAP measures later in this release.

Net sales in the fourth quarter of fiscal 2013 were $614 million, an increase of four percent compared to the prior year due to increased volumes from the Company’s recent platform launches that continue to gain traction and expand across car lines.

Gross margin on a non-GAAP basis in the fourth quarter of fiscal 2013 decreased 170 basis points to 21.5 percent primarily due to lower operating leverage as a result of lower production volumes in Europe and higher warranty costs. SG&A spending decreased 220 basis points to 14.4 percent of net sales primarily due to high profit engineering change orders and recovery of project engineering costs.

Infotainment Division Highlights

HARMAN continues to be the global driving force for innovation in embedded infotainment systems. During the quarter, the Company’s best in class approach was acknowledged by Frost & Sullivan, the global research and consulting firm. Frost & Sullivan named HARMAN as a Best Practices Honoree and awarded the Company with its 2013 Award for Global Industry Leadership for In-Vehicle Infotainment.

The Company continues to gain traction with five new Start of Production (SOP) programs launched this year with BMW, Mercedes, Chrysler/Fiat, Volkswagen, and Harley Davidson. Volumes on the recently-launched platforms are increasing and the platforms are expanding across car lines.

During its Investor Day presentations, the Company will provide an analysis of its infotainment backlog and newly awarded business.

In addition to the five new SOPs, highlights during fiscal 2013 for the Infotainment Division included the continued expansion beyond the center console into advanced safety technologies. During the fiscal year, the Company demonstrated a series of advanced safety features such as heads-up displays, augmented navigation, and gesture controls at events such as CES and the Geneva Motor Show; introduced an Android-based infotainment platform; acquired driver safety technology company iOnRoad Technologies Ltd.; and established a software engineering center in Vernon Hills, Illinois. HARMAN also showcased the integration of Apple’s Siri intelligent voice concierge in the latest Ferrari FF model. HARMAN’s cloud-based Aha Radio solution gained traction during the year, with ten leading automakers from Asia, Europe and North America offering the embedded service in their vehicles by the end of 2013. The Company also announced the creation of HARMAN Infotainment Services that is expected to leverage the installed base of over 20 million HARMAN infotainment equipped vehicles on the road today to create a fast growing, recurring revenue stream with high margins.

 

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Lifestyle Division

 

FY 2013 Key Figures – Lifestyle		Three Months Ended June 30																Twelve Months Ended June 30
										Increase (Decrease)																Increase (Decrease)
$ millions		3M FY13				3M FY12				Including Currency Changes				Excluding Currency Changes1				12M FY13				12M FY12				Including Currency Changes				Excluding Currency Changes1
Net sales			348				330				5	%			5	%			1,338				1,331				1	%			2	%
Gross profit			76				102				(25	%)			(25	%)			371				393				(6	%)			(4	%)
Percent of net sales			21.9	%			31.0	%											27.7	%			29.6	%
SG&A & Other			49				60				(18	%)			(18	%)			234				242				(3	%)			(1	%)
Operating income			27				42				(36	%)			(36	%)			137				151				(9	%)			(8	%)
Percent of net sales			7.7	%			12.8	%											10.3	%			11.4	%
Restructuring-related costs and other non-GAAP items			15				(1	)											19				0
Non-GAAP
Gross profit(1)			99				102				(3	%)			(3	%)			396				393				1	%			3	%
Percent of net sales(1)			28.5	%			31.0	%											29.6	%			29.5	%
SG&A & Other(1)			57				60				(5	%)			(5	%)			239				241				(1	%)			1	%
Operating income(1)			42				42				0	%			1	%			157				152				3	%			5	%
Percent of net sales(1)			12.1	%			12.7	%											11.7	%			11.4	%

 

1	A non-GAAP measure, see reconciliations of non-GAAP measures later in this release.

Net sales in the fourth quarter of fiscal 2013 were $348 million, an increase of five percent compared to the prior year. Revenues increased due to strong sales growth in the Company’s home and multimedia product lines partially off-set by weakness in the car audio business.

Gross margin on a non-GAAP basis in the fourth quarter of fiscal 2013 decreased by 250 basis points compared to the prior year to 28.5 percent primarily due to lower operating leverage in car audio as a result of lower volumes. SG&A expense as a percentage of sales in the fourth quarter of fiscal 2013 decreased by 180 basis points due to improved operating leverage and strong cost management.

Lifestyle Division Highlights

During the quarter, the Company received a new award from Volvo for branded audio solutions across several car lines globally. The Company also secured new business with Chrysler for HARMAN’s HALOsonic sound management solutions.

During its Investor Day presentations, the Company will provide an analysis of its car audio backlog and newly awarded business.

The Company continues to have strong momentum with its home and multimedia products. The Company’s products were recognized this year with seventeen Red Dot Design Awards in Germany. More than 50 companies entered this year’s international competition, which judges best products among their peers. HARMAN’s Lifestyle products have earned 39 awards from Red Dot, CES, and other prestigious organizations in the past seven months. In addition, the Company’s JBL Flip continues to be the number one selling product in its category in the United States.

In fiscal 2013, the Lifestyle Division grew its car audio backlog to record levels as automakers in all major markets continued to acknowledge the Company’s technological leadership, strong brand portfolio, and best-in-class global footprint. The Company secured new audio awards from existing customers including BAIC, BMW, Ferrari, Fiat, Geely, Hyundai, Kia, Lexus, Mercedes, Mini, Subaru, and Toyota, and won new customers such as Maserati, Ford, Volvo, and JAC of China. Furthering its reputation for audio leadership, HARMAN innovations such as QuantumLogic Surround 3D^® digital signal processing and HALOsonic noise cancellation and engine sound generation solutions were also chosen by automakers during the year for new vehicle programs. Within the home and multimedia business unit, HARMAN achieved strong growth and gained market share with innovative new products. During the Apple iPhone5 launch, HARMAN was the first to ship JBL docking stations featuring new 8-pin Lightning connectors. The Company also collaborated with Nokia to launch JBL PowerUp, the first co-branded wireless charging/docking speakers for the Nokia Windows 8 smartphones.

 

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Professional Division

 

FY 2013 Key Figures – Professional		Three Months Ended June 30																Twelve Months Ended June 30
										Increase (Decrease)																Increase (Decrease)
$ millions		3M FY13				3M FY12				Including Currency Changes				Excluding Currency Changes1				12M FY13				12M FY12				Including Currency Changes				Excluding Currency Changes1
Net sales			220				172				28	%			29	%			673				631				7	%			8	%
Gross profit			77				60				29	%			30	%			250				232				8	%			9	%
Percent of net sales			35.2	%			34.9	%											37.1	%			36.8	%
SG&A & Other			52				38				38	%			39	%			164				159				3	%			4	%
Operating income			26				22				14	%			15	%			86				73				18	%			19	%
Percent of net sales			11.6	%			13.0	%											12.8	%			11.6	%
Restructuring-related costs and other non-GAAP items			8				1												9				9
Non-GAAP
Gross profit(1)			84				60				40	%			40	%			259				232				11	%			13	%
Percent of net sales(1)			38.1	%			34.9	%											38.5	%			36.8	%
SG&A & Other(1)			51				37				37	%			37	%			164				150				9	%			10	%
Operating income(1)			33				23				44	%			45	%			95				82				16	%			17	%
Percent of net sales(1)			15.1	%			13.4	%											14.1	%			13.0	%

 

1	A non-GAAP measure, see reconciliations of non-GAAP measures later in this release.

Net sales in the fourth quarter of fiscal 2013 were $220 million, an increase of 28 percent compared to the prior year due to the expansion of the Company’s product portfolio into lighting as a result of the acquisition of Martin Professional A/S and stronger demand for the Company’s audio products in emerging markets.

Gross margin on a non-GAAP basis in the fourth quarter of fiscal 2013 increased 320 basis points due to higher margin new product introductions and productivity initiatives. SG&A expense on a non-GAAP basis in the fourth quarter of fiscal 2013 increased 140 basis points to 23.0 percent due to integration costs related to the acquisition of Martin Professional and higher structural SG&A in the acquired lighting product line.

Professional Division Highlights

HARMAN maintained its sector leadership and increased its penetration in the install and touring markets during the quarter.

In the developed markets, the Company’s professional solutions were again featured at high profile events including the Tony Awards ceremony and the Rock ‘N’ Roll Hall of Fame Awards ceremony. Paul McCartney, the Rolling Stones, and Brad Paisley are also using the Company’s solutions on their tours. HARMAN won the business to outfit Madison Square Garden Theater, Pepsi Stadium in Denver, and Levi’s Stadium, the new home of the San Francisco 49ers. In addition, HARMAN was awarded contracts with Amtrak and MGM Hotels Worldwide for the IDX integrated audio and visual information delivery system.

The Company’s focus on the emerging markets continues to yield results. The Company has been awarded two additional FIFA World Cup Stadiums bringing the HARMAN total to eight new stadiums in Brazil. The two new stadiums will be fitted with a full suite of the Company’s leading audio products and IDX solution.

In fiscal 2013, the Company’s professional solutions were featured at several high profile events including the United States presidential inauguration, the Super Bowl, musical award performances such as the Grammy, Oscar and Tony Awards; and the Sandy Relief benefit concert at Madison Square Garden. Throughout the year, HARMAN professional audio systems were deployed in new sporting venues, houses of worship, performance halls, and cinemas around the world. The Company expanded its professional product line to the lighting and visual effects market with the acquisition of Martin Professional. HARMAN’s IDX system also saw rapid growth as it was chosen to service airports and transit facilities in Brazil, Canada, China, Colombia, India, and the United States. In China, HARMAN introduced a premium loudspeaker series for the fast-growing $500 million Karaoke Television (KTV) market.

 

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Other (Corporate)

 

FY 2013 Key Figures – Other		Three Months Ended June 30																Twelve Months Ended June 30
										Increase (Decrease)																Increase (Decrease)
$ millions		3M FY13				3M FY12				Including Currency Changes				Excluding Currency Changes1				12M FY13				12M FY12				Including Currency Changes				Excluding Currency Changes1
SG&A & Other			32				34				(6	%)			(6	%)			114				106				7	%			7	%
Restructuring-related costs and other non-GAAP items			0				0												0				(1	)
Non-GAAP1
SG&A & Other			32				34				(6	%)			(6	%)			114				106				7	%			7	%

 

1	A non-GAAP measure, see reconciliations of non-GAAP measures later in this release.

Other (Corporate) SG&A expense includes compensation, benefit and occupancy costs for corporate employees, new technology innovation, and expenses associated with the Company’s brand identity campaign.

 

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HARMAN International Industries, Incorporated

Consolidated Statements of Income

 

(In thousands, except earnings per share data; unaudited)		Three Months Ended June 30,								Twelve Months Ended June 30,
		2013				2012				2013				2012
Net sales		$	1,182,235			$	1,090,771			$	4,297,842			$	4,364,078
Cost of sales			897,350				792,436				3,193,722				3,179,932
Gross profit			284,885				298,335				1,104,120				1,184,146
Selling, general and administrative expenses			269,369				227,519				902,869				884,200
Sale of Intellectual Property			0				1				0				(300	)
Operating income			15,516				70,815				201,251				300,246
Other expenses:
Interest expense, net			1,572				5,397				12,868				20,126
Foreign exchange (gains) losses, net			2,819				1,446				2,313				13,152
Miscellaneous, net			8,017				1,575				11,800				5,815
Income from operations before taxes			3,108				62,397				174,270				261,153
Income tax expense (benefit), net			(2,477	)			13,134				31,729				(68,388	)
Equity in loss of unconsolidated subsidiaries			95				0				134				0
Net income		$	5,490			$	49,263			$	142,407			$	329,541
Earnings per share:
Basic		$	0.08			$	0.69			$	2.06			$	4.62
Diluted		$	0.08			$	0.69			$	2.04			$	4.57
Weighted average shares outstanding:
Basic			69,164				71,054				68,990				71,297
Diluted			69,965				71,878				69,736				72,083

 

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HARMAN International Industries, Incorporated

Consolidated Balance Sheets

 

(In thousands; unaudited)		June 30, 2013				June 30, 2012
ASSETS
Current assets
Cash and cash equivalents		$	454,258			$	617,356
Short-term investments			10,008				203,014
Receivables, net			722,711				582,835
Inventories			549,831				427,597
Other current assets			352,244				285,443
Total current assets			2,089,052				2,116,245
Property, plant and equipment			425,182				430,234
Goodwill			234,342				180,811
Deferred tax assets, long term			260,749				308,768
Other assets			226,360				133,406
Total assets		$	3,235,685			$	3,169,464
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Current portion of long-term debt		$	30,000			$	395,409
Short-term debt			4,930				227
Accounts payable			498,055				505,694
Accrued liabilities			402,704				368,002
Accrued warranties			128,411				97,289
Income taxes payable			13,414				15,279
Total current liabilities			1,077,514				1,381,900
Long-term debt			255,043				0
Pension liability			167,687				168,099
Other non-current liabilities			90,570				89,854
Total liabilities			1,590,814				1,639,853
Total equity			1,644,871			$	1,529,611
Total liabilities and equity		$	3,235,685			$	3,169,464

 

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HARMAN International Industries, Incorporated

Consolidated Statement of Income

Reconciliation of GAAP to Non-GAAP Results

 

(In thousands, except earnings per share data; unaudited)		Three Months Ended June 30, 2013
		GAAP				Adjustments				Non-GAAP
Net sales		$	1,182,235			$	0			$	1,182,235
Cost of sales			897,350				(30,749	)a			866,601
Gross profit			284,885				30,749				315,634
Selling, general and administrative expenses			269,369				(41,211	)b			228,158
Sale of Intellectual Property			0				0				0
Operating income			15,516				71,960				87,476
Other expenses:
Interest expense, net			1,572				0				1,572
Foreign exchange losses, net			2,819				0				2,819
Miscellaneous, net			8,017				(5,993	)d			2,024
Income from operations before taxes			3,108				77,953				81,061
Income tax expense			(2,477	)			20,020	c			17,543
Equity in loss of unconsolidated subsidiaries			95				0				95
Net income		$	5,490			$	57,933			$	63,423
Earnings per share:
Basic		$	0.08			$	0.84			$	0.92
Diluted		$	0.08			$	0.83			$	0.91
Weighted average shares outstanding:
Basic			69,164								69,164
Diluted			69,965								69,965

 

a)	Restructuring expense in Cost of Sales was $3.2 million for projects to increase manufacturing productivity and a non-recurring expense of $27.5 million related to potential NAFTA customs duties from prior years.

b)

Restructuring expense in SG&A was $50.8 million primarily due to the divestment of a German manufacturing operation and projects to increase productivity in engineering and administrative functions; other non-recurring income in SG&A was $9.6 million due to the reduction of a contingent consideration accrual for MWM Acoustics, LLC and certain related entities.

c)	The tax benefits are calculated by multiplying the actual restructuring / non-recurring charge in each individual country by the statutory tax rate within that specific country.

d)	Non-recurring expense in miscellaneous, net includes a loss on available for sale securities.

HARMAN has provided a reconciliation of non-GAAP measures in order to provide the users of these financial statements with a better understanding of its non-recurring charges. These non-GAAP measures are not measurements under accounting principles generally accepted in the United States. These measurements should be considered in addition to, but not as a substitute for, the information contained in HARMAN’s consolidated financial statements prepared in accordance with US GAAP.

 

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HARMAN International Industries, Incorporated

Consolidated Statement of Income

Reconciliation of GAAP to Non-GAAP Results

 

(In thousands, except earnings per share data; unaudited)		Twelve Months Ended June 30, 2013
		GAAP				Adjustments				Non-GAAP
Net sales		$	4,297,842			$	0			$	4,297,842
Cost of sales			3,193,722				(35,404	)a			3,158,318
Gross profit			1,104,120				35,404				1,139,524
Selling, general and administrative expenses			902,869				(53,083	)b			849,786
Sale of Intellectual Property			0				0				0
Operating income			201,251				88,487				289,738
Other expenses:
Interest expense, net			12,868				(1,129	)			11,739
Foreign exchange losses, net			2,313				0				2,313
Miscellaneous, net			11,800				(6,019	)			5,781
Income from operations before taxes			174,270				95,635				269,905
Income tax expense			31,729				23,632	c			55,361
Equity in loss of unconsolidated subsidiaries			134				0				134
Net income		$	142,407			$	72,003			$	214,410
Earnings per share:
Basic		$	2.06			$	1.04			$	3.11
Diluted		$	2.04			$	1.03			$	3.07
Weighted average shares outstanding:
Basic			68,990								68,990
Diluted			69,736								69,736

 

a)	Restructuring expense in Cost of Sales was $7.9 million due to projects to increase productivity in manufacturing; other non- recurring expense included in Cost of Sales was $27.5 million for potential NAFTA customs duties from prior years.

b)

Restructuring expense in SG&A was $75.2 million primarily due to the divestment of a German manufacturing operation and projects to increase productivity in engineering and administrative functions; other non-recurring income in SG&A was 22.1 million due to reduction of a contingent consideration accrual for MWM Acoustics.

c)	The tax benefits are calculated by multiplying the actual restructuring / non-recurring charge in each individual country by the statutory tax rate within that specific country.

HARMAN International has provided a reconciliation of non-GAAP measures in order to provide the users of these financial statements with a better understanding of our non-recurring charges. These non-GAAP measures are not measurements under accounting principles generally accepted in the United States. These measurements should be considered in addition to, but not as a substitute for, the information contained in our consolidated financial statements prepared in accordance with US GAAP.

 

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Harman International Industries, Incorporated

Reconciliation of GAAP to Non-GAAP Results

 

(In thousands, except earnings per share data; unaudited)		Three Months Ended June 30, 2012
		GAAP				Adjustments				Non-GAAP
Net sales		$	1,090,771			$	0			$	1,090,771
Cost of sales			792,436				(820	)a			791,616
Gross profit			298,335				820				299,155
Selling, general and administrative expenses			227,519				1,842	b			229,361
Sale of Intellectual Property			1				0				1
Operating income			70,815				(1,022	)			69,793
Other expenses:
Interest expense, net			5,397				0				5,397
Foreign exchange losses, net			1,446				249				1,695
Miscellaneous, net			1,575				0				1,575
Income from operations before taxes			62,397				(1,271	)			61,126
Income tax expense			13,134				(196	)c			12,938
Net income		$	49,263			$	(1,075	)		$	48,188
Earnings per share:
Basic		$	0.69			$	(0.01	)		$	0.68
Diluted		$	0.69			$	(0.02	)		$	0.67
Weighted average shares outstanding:
Basic			71,054								71,054
Diluted			71,878								71,878

 

(a)	Restructuring expense in Cost of Sales was $0.8 million due to projects to increase productivity in manufacturing.

(b)	Restructuring credit in SG&A was $1.8 million due to the reversal of accruals formed in a prior period.

(c)	The tax benefits are calculated by multiplying the actual non-recurring charge in each individual country by the discrete tax rate within that specific country.

HARMAN has provided a reconciliation of non-GAAP measures in order to provide the users of these financial statements with a better understanding of its non-recurring charges. These non-GAAP measures are not measurements under accounting principles generally accepted in the United States. These measurements should be considered in addition to, but not as a substitute for, the information contained in HARMAN’s consolidated financial statements prepared in accordance with US GAAP.

 

12

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Harman International Industries, Incorporated

Reconciliation of GAAP to Non-GAAP Results

 

(In thousands, except earnings per share data; unaudited)		Twelve Months Ended June 30, 2012
		GAAP				Adjustments				Non-GAAP
Net sales		$	4,364,078			$	0			$	4,364,078
Cost of sales			3,179,932				(3,411	)a			3,176,521
Gross profit			1,184,146				3,411				1,187,557
Selling, general and administrative expenses			884,200				(5,987	)b			878,213
Sale of Intellectual Property			(300	)			0				(300	)
Operating income			300,246				9,398				309,644
Other expenses:
Interest expense, net			20,126				0				20,126
Foreign exchange losses, net			13,152				249				13,401
Miscellaneous, net			5,815				0				5,815
Income from operations before taxes			261,153				9,149				270,302
Income tax expense			(68,388	)			127,450	c			59,062
Net income		$	329,541			$	(118,301	)		$	211,240
Earnings per share:
Basic		$	4.62			$	(1.66	)		$	2.96
Diluted		$	4.57			$	(1.64	)		$	2.93
Weighted average shares outstanding:
Basic			71,297								71,297
Diluted			72,083								72,083

 

(a)	Restructuring expense in Cost of Sales was $3.4 million due to projects to increase productivity in manufacturing.

(b)	Restructuring expense in SG&A was $6.0 million due to projects to increase productivity in engineering and administrative functions.

(c)	The tax benefits are calculated by multiplying the actual non-recurring charge in each individual country by the discrete tax rate within that specific country.

HARMAN has provided a reconciliation of non-GAAP measures in order to provide the users of these financial statements with a better understanding of its non-recurring charges. These non-GAAP measures are not measurements under accounting principles generally accepted in the United States. These measurements should be considered in addition to, but not as a substitute for, the information contained in HARMAN’s consolidated financial statements prepared in accordance with US GAAP.

 

13

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HARMAN International Industries, Incorporated

Selected Financial Data

Reconciliation of GAAP to Non-GAAP Results

Foreign Currency Translation Impact

 

(In thousands; unaudited)		Three Months Ended June 30,								Increase (Decrease)
		2013				2012
Net sales – nominal currency		$	1,182,235			$	1,090,771				8	%
Effect of foreign currency translation(1)							7,894
Net sales – local currency			1,182,235				1,098,665				8	%
Gross profit – nominal currency			284,885				298,335				(5	%)
Effect of foreign currency translation(1)							1,936
Gross profit – local currency			284,885				300,271				(5	%)
SG&A & Other – nominal currency			269,369				227,520				18	%
Effect of foreign currency translation(1)							576
SG&A & Other – local currency			269,369				228,096				18	%
Operating income – nominal currency			15,516				70,815				(78	)%
Effect of foreign currency translation(1)							1,360
Operating income – local currency			15,516				72,175				(79	)%
Net income – nominal currency			5,490				49,263				(89	)%
Effect of foreign currency translation(1)							1,113
Net income – local currency			5,490				50,376				(89	)%

 

(1)	Impact of restating prior year results at current year foreign exchange rates.

HARMAN has provided a reconciliation of the non-GAAP measures in the table above to provide the users of the financial statements with a better understanding of the Company’s performance. Because changes in currency exchange rates affect its reported financial results, the Company shows the rates of change both including and excluding the effect of these changes in exchange rates. HARMAN encourages readers of its financial statements to evaluate its financial performance excluding the impact of foreign currency translation. These non-GAAP measures are not measurements under accounting principles generally accepted in the United States. This measurement should be considered in addition to, but not as a substitute for, the information contained in HARMAN’s consolidated financial statements prepared in accordance with US GAAP.

 

14

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HARMAN International Industries, Incorporated

Selected Financial Data

Reconciliation of Non-GAAP Results

Foreign Currency Translation Impact

 

EXCLUDING restructuring and non-recurring charges		Three Months Ended
(In thousands; unaudited)		June 30,								Increase
		2013				2012				(Decrease)
Net sales – nominal currency		$	1,182,235			$	1,090,771				8	%
Effect of foreign currency translation(1)							7,894
Net sales – local currency			1,182,235				1,098,665				8	%
Gross profit – nominal currency			315,634				299,155				6	%
Effect of foreign currency translation(1)							1,936
Gross profit – local currency			315,634				301,091				5	%
SG&A & Other – nominal currency			228,158				229,362				(1	)%
Effect of foreign currency translation(1)							734
SG&A & Other – local currency			228,158				230,096				(1	)%
Operating income – nominal currency			87,476				69,793				25	%
Effect of foreign currency translation(1)							1,202
Operating income – local currency			87,476				70,995				23	%
Net income – nominal currency			63,423				48,188				32	%
Effect of foreign currency translation(1)							954
Net income – local currency			63,423				49,142				29	%

 

(1)	Impact of restating prior year results at current year foreign exchange rates.

HARMAN has provided a reconciliation of the non-GAAP measures in the table above to provide the users of the consolidated financial statements with a better understanding of the Company’s performance. Because changes in currency exchange rates affect its reported financial results, the Company shows the rates of change both including and excluding the effect of these changes in exchange rates. The Company encourages readers of its financial statements to evaluate its financial performance excluding the impact of foreign currency translation. These non-GAAP measures are not measurements under accounting principles generally accepted in the United States. This measurement should be considered in addition to, but not as a substitute for, the information contained in HARMAN’s consolidated financial statements prepared in accordance with US GAAP.

 

15

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HARMAN International Industries, Incorporated

Selected Financial Data

Reconciliation of GAAP to Non-GAAP Results

Foreign Currency Translation Impact

 

(In thousands; unaudited)		Twelve Months Ended June 30,								Increase (Decrease)
		2013				2012
Net sales – nominal currency		$	4,297,842			$	4,364,078				(2	)%
Effect of foreign currency translation(1)							(92,757	)
Net sales – local currency			4,297,842				4,271,321				1	%
Gross profit – nominal currency			1,104,120				1,184,146				(7	)%
Effect of foreign currency translation(1)							(24,620	)
Gross profit – local currency			1,104,120				1,159,526				(5	)%
SG&A & Other – nominal currency			902,869				883,900				2	%
Effect of foreign currency translation(1)							(17,473	)
SG&A & Other – local currency			902,869				866,427				4	%
Operating income – nominal currency			201,251				300,246				(33	)%
Effect of foreign currency translation(1)							(7,148	)
Operating income – local currency			201,251				293,098				(31	)%
Net income – nominal currency			142,407				329,541				(57	)%
Effect of foreign currency translation(1)							(5,731	)
Net income – local currency			142,407				323,810				(56	)%

 

(1)	Impact of restating prior year results at current year foreign exchange rates.

HARMAN has provided a reconciliation of the non-GAAP measures in the table above to provide the users of the financial statements with a better understanding of the Company’s performance. Because changes in currency exchange rates affect its reported financial results, the Company shows the rates of change both including and excluding the effect of these changes in exchange rates. HARMAN encourages readers of its financial statements to evaluate its financial performance excluding the impact of foreign currency translation. These non-GAAP measures are not measurements under accounting principles generally accepted in the United States. This measurement should be considered in addition to, but not as a substitute for, the information contained in HARMAN’s consolidated financial statements prepared in accordance with US GAAP.

 

16

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HARMAN International Industries, Incorporated

Selected Financial Data

Reconciliation of Non-GAAP Results

Foreign Currency Translation Impact

 

EXCLUDING restructuring and non-recurring charges		Twelve Months Ended
(In thousands; unaudited)		June 30,								Increase
		2013				2012				(Decrease)
Net sales – nominal currency		$	4,297,842			$	4,364,078				(2	)%
Effect of foreign currency translation(1)							(92,757	)
Net sales – local currency			4,297,842				4,271,321				1	%
Gross profit – nominal currency			1,139,524				1,187,557				(4	)%
Effect of foreign currency translation(1)							(24,625	)
Gross profit – local currency			1,139,524				1,162,932				(2	)%
SG&A & Other – nominal currency			849,786				877,913				(3	)%
Effect of foreign currency translation(1)							(17,312	)
SG&A & Other – local currency			849,786				860,601				(1	)%
Operating income – nominal currency			289,738				309,644				(6	)%
Effect of foreign currency translation(1)							(7,313	)
Operating income – local currency			289,738				302,331				(4	)%
Net income – nominal currency			214,410				211,240				2	%
Effect of foreign currency translation(1)							(5,897	)
Net income – local currency			214,410				205,343				4	%

 

(1)	Impact of restating prior year results at current year foreign exchange rates.

HARMAN has provided a reconciliation of the non-GAAP measures in the table above to provide the users of the consolidated financial statements with a better understanding of the Company’s performance. Because changes in currency exchange rates affect its reported financial results, the Company shows the rates of change both including and excluding the effect of these changes in exchange rates. HARMAN encourages readers of its financial statements to evaluate its financial performance excluding the impact of foreign currency translation. These non-GAAP measures are not measurements under accounting principles generally accepted in the United States. This measurement should be considered in addition to, but not as a substitute for, the information contained in HARMAN’s consolidated financial statements prepared in accordance with US GAAP.

 

17

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HARMAN International Industries, Incorporated

Total Liquidity Reconciliation

 

Total Company Liquidity		June  30, 2013
$ millions
Cash & cash equivalents		$	454
Short-term investments			10
Available credit under Revolving Credit Facility			743
Total liquidity		$	1,207

 

18