Exhibit 99.1

 

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

HARMAN Reports Fourth Quarter and Full Year Fiscal 2014 Results

 

•

Q4 Net Sales climb 22% to $1.4 billion; Full Year Net Sales up 24% to $5.3 billion

 

•

Q4 Operational EPS up 38% to $1.25; Full Year Operational EPS up 43% to $4.41

 

•

Issues guidance for Fiscal Year 2015; Raises Fiscal Year 2016 Revenue outlook $800 million to $6.85 billion

 

•

Industry-leading automotive backlog grows to record high of $20.5 billion

 

•

Expands portfolio into enterprise automation and control through the acquisition of AMX

STAMFORD, CT, August 7, 2014 – Harman International Industries, Incorporated (NYSE: HAR), the premier audio, visual, and infotainment group, today announced results for the fourth quarter and full year ended June 30, 2014.

Net sales for the fourth quarter were $1.444 billion, an increase of 22 percent compared to the same period last year, as all three of the Company’s divisions reported increased sales. Infotainment net sales increased due to the expansion of recent production launches, higher automotive production, and higher take rates. Lifestyle growth was driven by strong demand for the Company’s home and multimedia products launched earlier in the year and an increase in automotive production and take rates in the car audio business. HARMAN’s Professional Division net sales increased as a result of strong demand for the Company’s lighting and audio products.

Excluding restructuring and non-recurring charges, fourth quarter operating income was $121 million, compared to $87 million in the same period last year. On the same non-GAAP basis, earnings per diluted share were $1.25 for the quarter compared to $0.91 in the same period last year. On a GAAP basis, fourth quarter operating income was $57 million compared to $16 million in the same period last year, and earnings per diluted share were $0.62 for the quarter compared to $0.08 in the prior year.

Net sales for the full year were $5.348 billion, an increase of 24 percent compared to the prior year, as all three of the Company’s divisions reported increased sales. Excluding restructuring and non-recurring charges, fiscal year 2014 operating income was $430 million compared to $290 million in the prior year. On the same non-GAAP basis, earnings per diluted share were $4.41 for the year compared to $3.07 in the prior year. On a GAAP basis, fiscal year 2014 operating income was $330 million compared to $201 million in prior year, and earnings per diluted share were $3.36 compared to $2.04 in the prior year.

“We are extremely pleased that, for the fourth consecutive quarter, all three of our divisions achieved double-digit top-line growth, facilitating a 38 percent improvement in earnings per share,” said Dinesh C. Paliwal, the Company’s Chairman, President and CEO. “In our automotive businesses, we are capitalizing on robust demand for an embedded connected car experience and a more favorable production environment. In our other businesses, we continue to gain traction with our award winning products and have recently expanded our portfolio into exciting new markets including enterprise automation and control. We are executing our strategy and, as a result, we have issued strong guidance for fiscal year 2015, raised our outlook for fiscal year 2016 and reported a Company record backlog.”

Paliwal continued, “While achieving record performance in fiscal year 2014, we are taking additional restructuring actions as we continue to relentlessly focus on cost management and align our operations with growth markets. We firmly believe that innovation combined with cost leadership continues to position us for sustainable long-term success.”

 

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FY 2014 Key Figures – Total Company		Three Months Ended June 30																Twelve Months Ended June 30
										Increase (Decrease)																Increase (Decrease)
$ millions (except per share data)		3M FY14				3M FY13				Including Currency Changes				Excluding Currency Changes1				12M FY14				12M FY13				Including Currency Changes				Excluding Currency Changes1
Net sales			1,444				1,182				22	%			20	%			5,348				4,298				24	%			22	%
Gross profit			391				285				37	%			35	%			1,457				1,104				32	%			30	%
Percent of net sales			27.1	%			24.1	%											27.2	%			25.7	%
SG&A			334				269				24	%			21	%			1,127				903				25	%			23	%
Operating income			57				16				268	%			307	%			330				201				64	%			64	%
Percent of net sales			4.0	%			1.3	%											6.2	%			4.7	%
EBITDA			92				52				78	%			81	%			462				329				40	%			39	%
Percent of net sales			6.4	%			4.4	%											8.6	%			7.7	%
Net Income attributable to HARMAN International Industries, Incorporated			43				5				n.m.				n.m.				235				142				65	%			64	%
Diluted earnings per share			0.62				0.08				n.m.				n.m.				3.36				2.04				64	%			63	%
Restructuring & non-recurring costs			64				72												100				88
Non-GAAP1
Gross profit			394				316				25	%			23	%			1,466				1,140				29	%			27	%
Percent of net sales			27.3	%			26.7	%											27.4	%			26.5	%
SG&A			274				228				20	%			18	%			1,036				850				22	%			21	%
Operating income			121				87				38	%			38	%			430				290				48	%			47	%
Percent of net sales			8.3	%			7.4	%											8.0	%			6.7	%
EBITDA			154				121				28	%			27	%			555				413				35	%			33	%
Percent of net sales			10.7	%			10.2	%											10.4	%			9.6	%
Net Income attributable to HARMAN International Industries, Incorporated			87				63				38	%			38	%			308				214				44	%			41	%
Diluted earnings per share			1.25				0.91				38	%			38	%			4.41				3.07				43	%			41	%
Shares outstanding – diluted (in millions)			70				70												70				70

 

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

Summary of Operations – Gross Margin and SG&A

Non-GAAP gross margin for the fourth quarter of fiscal 2014 increased 59 basis points to 27.3 percent. The improvement was primarily due to the impact of higher sales volume on fixed production costs.

In the fourth quarter of fiscal 2014, SG&A expense as a percentage of net sales decreased 36 basis points to 18.9 percent on a non-GAAP basis.

Fiscal 2015 and 2016 Outlook

HARMAN today provided guidance for fiscal 2015 and raised its financial outlook for fiscal 2016.

 

Fiscal Year 2015

HARMAN

Infotainment Division

Lifestyle Division

Professional Division

Sales

~$

6.0 billion

~$

3.1 billion

~$

1.8 billion

~$

1.1 billion

EBITDA*

~$

685 million

~$

375 million

~$

265 million

~$

175 million

EPS*

~$

5.25

 

Fiscal Year 2016

HARMAN

Infotainment Division

Lifestyle Division

Professional Division

Sales

~$

6.85 billion

~$

3.7 billion

~$

1.95 billion

~$

1.2 billion

~EBITDA*

~$

880 million

~$

490 million

~$

310 million

~$

215 million

 

*	Non-GAAP, excluding restructuring and non-recurring items

Key planning assumptions are outlined in the Company’s slide deck posted on the Investors section of the Company’s website at: www.harman.com

Investor Call Today, August 7, 2014

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 wish to participate via audio in the earnings conference call should dial 1 (800) 785 6380 (U.S.) or +1 (212) 231 2910 (International) ten minutes before the call and reference HARMAN, Access Code: 21721786.

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 fourth quarter earnings release and supporting materials will be posted on the site at approximately 8:00 a.m. EDT, Thursday, August 7, 2014.

 

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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 7, 2014 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: 21721786.

If you need technical assistance, please 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 (www.harman.com) 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 16,000 people across the Americas, Europe, and Asia and reported sales of $5.3 billion for the last 12 months ended June 30, 2014. The Company’s shares are traded on the New York Stock Exchange under the symbol NYSE:HAR.

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 of 1934, as amended. 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, uncertainties and assumptions 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 of its brands and implementing a sufficient brand protection program; and (9) other risks detailed in the Harman International Industries, Incorporated Annual Report on Form 10-K for the fiscal year ended June 30, 2013 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. To validate these awards, the Company uses 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 and reported externally on an annual basis. The Company updates the estimates and awarded business 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 2014 Key Figures – Infotainment		Three Months Ended June 30																Twelve Months Ended June 30
										Increase (Decrease)																Increase (Decrease)
$ millions		3M FY14				3M FY13				Including Currency Changes				Excluding Currency Changes1				12M FY14				12M FY13				Including Currency Changes				Excluding Currency Changes1
Net sales			773				614				26	%			22	%			2,839				2,283				24	%			20	%
Gross profit			171				131				31	%			28	%			635				482				32	%			28	%
Percent of net sales			22.1	%			21.3	%											22.4	%			21.1	%
SG&A			131				136				(4	%)			(7	%)			440				391				12	%			9	%
Operating income			40				(5	)			n.m.				n.m.				195				91				115	%			113	%
Percent of net sales			5.2	%			(0.9	%)											6.9	%			4.0	%
EBITDA			57				11				407	%			448	%			261				154				70	%			67	%
Percent of net sales			7.4	%			1.8	%											9.2	%			6.7	%
Restructuring & non-recurring costs			31				49												55				60
Non-GAAP1
Gross profit			172				132				30	%			27	%			641				483				33	%			29	%
Percent of net sales			22.3	%			21.5	%											22.6	%			21.2	%
SG&A			101				88				(15	%)			(11	%)			391				332				18	%			14	%
Operating income			71				44				62	%			61	%			250				151				66	%			62	%
Percent of net sales			9.2	%			7.2	%											8.8	%			6.6	%
EBITDA			87				59				47	%			45	%			310				213				46	%			42	%
Percent of net sales			11.2	%			9.6	%											10.9	%			9.3	%

 

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

Net sales in the fourth quarter of fiscal 2014 were $773 million, an increase of 26 percent compared to the same period in the prior year, or 22 percent excluding the impact of foreign currency translation. The increase in sales was due to the expansion of the Company’s recent production launches across car lines, higher automotive production, and higher take rates.

On a non-GAAP basis in the fourth quarter of fiscal 2014, gross margin increased 77 basis points to 22.3 percent compared to the same period in the prior year primarily due to the impact of improved leverage on fixed production costs, benefits from footprint migration restructuring initiatives, and an increase in software content. SG&A spending decreased 128 basis points to 13.1 percent of net sales primarily due to improved operating leverage on higher sales.

Infotainment Division Highlights

During the fourth quarter of fiscal 2014, HARMAN secured several new business awards bringing the fiscal 2014 total of new awards to $2.5 billion. The Company will develop premium infotainment solutions for both Bentley and Maserati. HARMAN also won an award from Scania/MAN to develop the Company’s first infotainment solution for commercial vehicles. HARMAN will leverage its scalable hardware and software architecture to enter this new market. In addition, the Company secured an award from Ssangyong to provide an eCall solution. On June, 30, 2014, the Company’s infotainment backlog was $16.2 billion, an all-time high for HARMAN.

In July, HARMAN secured a competitive replacement award from Subaru and a follow-on award from an existing European customer totaling $1.3 billion. HARMAN will supply base, mid, and high level solutions for Subaru across carlines globally. This award follows two previously announced awards from Japanese automakers, Yamaha and Suzuki.

At Google’s I/O conference in June, HARMAN was named as an Open Automotive Alliance partner, joining founding members Audi, General Motors, Google, Honda, Hyundai, and Nvidia. The Open Automotive Alliance was formed in early 2014 to accelerate in-car innovation via a common platform designed for openness, customization and scale. HARMAN’s participation in the new alliance complements the Company’s deep mobile expertise, which spans more than 25 million vehicles on the road today equipped with HARMAN audio and infotainment. HARMAN has started integrating smart apps like Apple CarPlay™ and Google Automotive Link™ into its embedded infotainment solutions.

 

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Lifestyle Division

 

FY 2014 Key Figures – Lifestyle		Three Months Ended June 30																Twelve Months Ended June 30
										Increase (Decrease)																Increase (Decrease)
$ millions		3M FY14				3M FY13				Including Currency Changes				Excluding Currency Changes1				12M FY14				12M FY13				Including Currency Changes				Excluding Currency Changes1
Net sales			424				348				22	%			21	%			1,656				1,338				24	%			22	%
Gross profit			124				76				63	%			62	%			498				371				34	%			33	%
Percent of net sales			29.3	%			21.9	%											30.1	%			27.7	%
SG&A			97				49				97	%			95	%			328				234				40	%			39	%
Operating income			27				27				(1	%)			0	%			171				137				24	%			24	%
Percent of net sales			6.3	%			7.7	%											10.3	%			10.3	%
EBITDA			36				37				(2	%)			(2	%)			205				174				18	%			18	%
Percent of net sales			8.6	%			10.6	%											12.4	%			13.0	%
Restructuring & non-recurring costs			20				15												27				19
Non-GAAP1
Gross profit			126				99				27	%			26	%			500				396				26	%			25	%
Percent of net sales			29.7	%			28.5	%											30.2	%			29.6	%
SG&A			79				57				38	%			37	%			302				239				26	%			25	%
Operating income			47				42				11	%			11	%			198				157				26	%			26	%
Percent of net sales			11.0	%			12.1	%											11.9	%			11.7	%
EBITDA			56				50				11	%			11	%			232				189				22	%			22	%
Percent of net sales			13.2	%			14.5	%											14.0	%			14.2	%

 

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

Net sales in the fourth quarter of fiscal 2014 were $424 million, an increase of 22 percent compared to the same period in the prior year, or 21 percent excluding the impact of foreign currency translation. The growth in the home and multimedia business was primarily due to accelerated sales of new products launched earlier in the year. The growth in the car audio business was primarily driven by an increase in automotive production and higher take rates due to the increasing importance of audio for a better connected car experience.

On a non-GAAP basis in the fourth quarter of fiscal 2014, gross margin increased by 116 basis points to 29.7 percent compared to the same period in the prior year. This is primarily due to the impact of improved leverage on fixed production costs and benefits from footprint migration restructuring initiatives. SG&A expense as a percentage of sales increased by 223 basis points to 18.7 percent primarily due to increased investment in marketing.

Lifestyle Division Highlights

During the fourth quarter of fiscal 2014, HARMAN secured new branded audio business awards from Alfa Romeo, Hyundai, Kia and Toyota. HARMAN also continued to expand its partnership with Ford in the area of hands-free microphones adding several new car lines including the next-generation F-150. As cars become more connected, voice control becomes more important as a way for drivers to safely interact with embedded in-vehicle systems. HARMAN’s microphone solutions deliver the advantage of small form factor and superior audio sensitivity. HARMAN also secured a similar award for MEMS microphones earlier in the year from Daimler. These new awards now bring the Company’s industry-leading car audio backlog to $4.3 billion.

HARMAN also launched car audio systems in the Hyundai Sonata, Lexus NX, Dodge Challenger, Kia Sedona, Subaru Outback, and Toyota Camry during the quarter.

The Company’s home and multimedia product line also launched several innovative new headphones and portable wireless products. In addition, HARMAN acquired yurbuds, the U.S. market leader in sports headphones. The acquisition will strengthen HARMAN’s position in the fast growing sports headphones and wearables markets.

 

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Professional Division

 

FY 2014 Key Figures – Professional		Three Months Ended June 30																Twelve Months Ended June 30
										Increase (Decrease)																Increase (Decrease)
$ millions		3M FY14				3M FY13				Including Currency Changes				Excluding Currency Changes1				12M FY14				12M FY13				Including Currency Changes				Excluding Currency Changes1
Net sales			248				220				13	%			12	%			853				673				27	%			27	%
Gross profit			96				77				24	%			23	%			323				250				29	%			30	%
Percent of net sales			38.6	%			35.2	%											37.9	%			37.1	%
SG&A			58				52				12	%			11	%			209				164				27	%			27	%
Operating income			37				26				46	%			47	%			114				86				33	%			35	%
Percent of net sales			15.1	%			11.6	%											13.4	%			12.8	%
EBITDA			43				32				35	%			35	%			135				103				31	%			33	%
Percent of net sales			17.4	%			14.5	%											15.8	%			15.3	%
Restructuring & non-recurring costs			3				8												6				9
Non-GAAP1
Gross profit			96				84				14	%			14	%			324				259				25	%			26	%
Percent of net sales			38.7	%			38.1	%											38.0	%			38.5	%
SG&A			55				51				9	%			8	%			203				164				24	%			24	%
Operating income			41				33				23	%			23	%			121				95				27	%			29	%
Percent of net sales			16.4	%			15.1	%											14.1	%			14.1	%
EBITDA			46				39				18	%			18	%			141				112				27	%			28	%
Percent of net sales			18.7	%			17.9	%											16.6	%			16.6	%

 

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

Net sales in the fourth quarter of fiscal 2014 were $248 million, an increase of 13 percent compared to the same period in the prior year or 12 percent excluding foreign currency translation. The increase in net sales is primarily due to strong demand for the Company’s lighting and audio products.

On a non-GAAP basis in the fourth quarter of fiscal 2014, gross margin increased 62 basis points to 38.7 percent compared to the same period in the prior year due to stronger profitability of the Company’s lighting products. SG&A expense as a percentage of sales decreased 72 basis points to 22.3 percent due to improved operating leverage on higher sales.

Professional Division Highlights

The Professional Division continued to experience robust demand for its audio and lighting products for use at live entertainment events and fixed venue installations worldwide.

In the fourth quarter of fiscal 2014, HARMAN’s audio and lighting system solutions were selected for installation at San Diego’s Petco Park, home of the Padres, and the University of Texas - El Paso Sun Bowl Stadium. The Company also upgraded the installed audio system at the Grand Mosque in Mecca, Saudi Arabia as well as numerous entertainment, hospitality and transportation facilities.

HARMAN’s products powered a wide range of high-profile televised award shows, special events, music festivals and tours. These included the Rock and Roll Hall of Fame Induction Ceremony, the Eurovision Song Contest, and Rock In Rio Lisbon. In Brazil, HARMAN audio systems were installed in eight of the 12 stadiums at the FIFA World Cup, and were featured on the field to support the Opening and Closing Ceremonies.

The division launched 44 new products during the fourth quarter. The Soundcraft Vi3000 digital mixing console was awarded Best of Show by the National Association of Broadcasters and the JBL VTX V20 loudspeaker system was honored with Rental & Staging’s Best New Product Award. In addition, the Martin Viper Quadray was honored as Live Design’s Lighting Product of the Year.

In June, HARMAN’s Professional Division acquired AMX LLC, a leading provider of enterprise automation and control systems as well as distributing and switching solutions for audio and video. With the addition of AMX, HARMAN is uniquely positioned to provide complete audio, video, lighting and automation solutions to customers globally.

 

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Other (Corporate)

 

FY 2014 Key Figures – Other		Three Months Ended June 30																Twelve Months Ended June 30
										Increase (Decrease)																Increase (Decrease)
$ millions		3M FY14				3M FY13				Including Currency Changes				Excluding Currency Changes1				12M FY14				12M FY13				Including Currency Changes				Excluding Currency Changes1
SG&A			47				32				47	%			48	%			151				114				32	%			32	%
Restructuring & non-recurring costs			9				0												12				0
Non-GAAP1
SG&A			38				32				19	%			19	%			139				114				22	%			22	%

 

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. In the fourth quarter of 2014, compared to the same period in the prior year, SG&A expenses as a percentage of the Company’s net sales on a non-GAAP basis decreased five basis points to 2.6%.

 

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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,
		2014				2013				2014				2013
Net sales		$	1,444,419			$	1,182,235			$	5,348,483			$	4,297,842
Cost of sales			1,053,624				897,350				3,891,816				3,193,722
Gross profit			390,795				284,885				1,456,667				1,104,120
Selling, general and administrative expenses			333,739				269,369				1,126,940				902,869
Operating income			57,056				15,516				329,727				201,251
Other expenses:
Interest expense, net			2,090				1,572				8,026				12,868
Foreign exchange losses (gains), net			1,190				2,819				5,935				2,313
Miscellaneous, net			2,568				8,017				8,371				11,800
Income before income taxes			51,208				3,108				307,395				174,270
Income tax expense, net			8,095				(2,477	)			72,610				31,729
Equity in net loss of unconsolidated subsidiaries			0				95				206				134
Net income			43,113				5,490				234,579				142,407
Net income attributable to non-controlling interest			(113	)			0				(113	)			0
Net income attributable to HARMAN International Industries, Incorporated		$	43,226			$	5,490			$	234,692			$	142,407
Earnings per share:
Basic		$	0.63			$	0.08			$	3.40			$	2.06
Diluted		$	0.62			$	0.08			$	3.36			$	2.04
Weighted average shares outstanding:
Basic			69,088				69,164				69,073				68,990
Diluted			70,058				69,965				69,889				69,736

 

8

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HARMAN International Industries, Incorporated

Consolidated Balance Sheets

 

(In thousands; unaudited)		June 30, 2014				June 30, 2013
ASSETS
Current assets
Cash and cash equivalents		$	581,312			$	454,258
Short-term investments			0				10,008
Receivables, net			894,579				722,711
Inventories			662,128				549,831
Other current assets			320,852				352,244
Total current assets			2,458,871				2,089,052
Property, plant and equipment, net			509,856				425,182
Goodwill			540,952				234,342
Deferred tax assets, long-term, net			170,558				260,749
Other assets			445,353				226,360
Total assets		$	4,125,590			$	3,235,685
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Current portion of long-term debt		$	35,625			$	30,000
Short-term debt			3,736				4,930
Accounts payable			697,553				498,055
Accrued liabilities			566,722				402,704
Accrued warranties			155,472				128,411
Income taxes payable			26,544				13,414
Total current liabilities			1,485,652				1,077,514
Long-term debt			519,407				255,043
Pension liability			186,352				167,687
Other non-current liabilities			141,158				90,570
Total liabilities			2,332,569				1,590,814
Total HARMAN International Industries, Incorporated shareholders’ equity			1,792,578				1,644,871
Non-controlling interest total equity			443				0
Total equity			1,793,021				1,644,871
Total liabilities and equity		$	4,125,590			$	3,235,685

 

9

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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, 2014
		GAAP				Adjustments				Non-GAAP
Net sales		$	1,444,419			$	0			$	1,444,419
Cost of sales			1,053,624				(3,295	)a			1,050,329
Gross profit			390,795				3,295				394,090
Selling, general and administrative expenses			333,739				(60,225	)b			273,514
Operating income			57,056				63,520				120,576
Other expenses:
Interest expense, net			2,090				0				2,090
Foreign exchange losses, net			1,190				0				1,190
Miscellaneous, net			2,568				46				2,614
Income before income taxes			51,208				63,474				114,682
Income tax expense, net			8,095				19,242	c			27,337
Equity in net loss of unconsolidated subsidiaries			0				0				0
Net income			43,113				44,232				87,345
Net income attributable to non-controlling interest			(113	)			0				(113	)
Net income attributable to HARMAN International Industries, Incorporated		$	43,226			$	44,232			$	87,458
Earnings per share:
Basic		$	0.63			$	0.64			$	1.26
Diluted		$	0.62			$	0.63			$	1.25
Weighted average shares outstanding:
Basic			69,088								69,088
Diluted			70,058								70,058

 

a)	Restructuring expense in Cost of Sales was $1.7 million for projects to increase manufacturing productivity; other non-recurring expense included in Cost of Sales was $1.6 million.

b)	Restructuring expense in SG&A was $48.9 million primarily due to projects to increase productivity in engineering, manufacturing and administrative functions; other non-recurring expense included in SG&A was $11.4 million.

c)	The tax benefits are calculated by multiplying the actual restructuring / 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.

 

10

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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, 2014
		GAAP				Adjustments				Non-GAAP
Net sales		$	5,348,483			$	0			$	5,348,483
Cost of sales			3,891,816				(8,838	)a			3,882,978
Gross profit			1,456,667				8,838				1,465,505
Selling, general and administrative expenses			1,126,940				(91,215	)b			1,035,725
Operating income			329,727				100,053				429,780
Other expenses:
Interest expense, net			8,026				0				8,026
Foreign exchange losses, net			5,935				0				5,935
Miscellaneous, net			8,371				46				8,417
Income before income taxes			307,395				100,007				407,402
Income tax expense, net			72,610				26,491	c			99,101
Equity in net loss of unconsolidated subsidiaries			206				0				206
Net income			234,579				73,516				308,095
Net income attributable to non-controlling interest			(113	)			0				(113	)
Net income attributable to HARMAN International Industries, Incorporated		$	234,692			$	73,516			$	308,208
Earnings per share:
Basic		$	3.40			$	1.06			$	4.46
Diluted		$	3.36			$	1.05			$	4.41
Weighted average shares outstanding:
Basic			69,073								69,073
Diluted			69,889								69,889

 

a)	Restructuring expense in Cost of Sales was $7.8 million due to projects to increase productivity in manufacturing; other non-recurring expense included in Cost of Sales was $1.0 million.

b)	Restructuring expense in SG&A was $76.4 million primarily due to projects to increase productivity in engineering, manufacturing and administrative functions; other non-recurring expense in SG&A was $14.8 million.

c)	The tax benefits are calculated by multiplying the actual restructuring / non-recurring charge in each individual country by the discrete 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.

 

11

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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
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 before income taxes			3,108				77,953				81,061
Income tax expense, net			(2,477	)			20,020	c			17,543
Equity in net loss of unconsolidated subsidiaries			95				0				95
Net income attributable to HARMAN International Industries, Incorporated		$	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.

 

12

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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
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 before income taxes			174,270				95,635				269,905
Income tax expense, net			31,729				23,632	c			55,361
Equity in net loss of unconsolidated subsidiaries			134				0				134
Net income attributable to HARMAN International Industries, Incorporated		$	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.

 

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)
		2014				2013
Net sales – nominal currency		$	1,444,419			$	1,182,235				22	%
Effect of foreign currency translation(1)							22,907
Net sales – local currency			1,444,419				1,205,142				20	%
Gross profit – nominal currency			390,795				284,885				37	%
Effect of foreign currency translation(1)							3,948
Gross profit – local currency			390,795				288,833				35	%
SG&A & Other – nominal currency			333,739				269,369				24	%
Effect of foreign currency translation(1)							5,451
SG&A & Other – local currency			333,739				274,820				21	%
Operating income – nominal currency			57,056				15,516				268	%
Effect of foreign currency translation(1)							(1,502	)
Operating income – local currency			57,056				14,014				307	%
Net income attributable to HARMAN International Industries, Incorporated – nominal currency			43,226				5,490				687	%
Effect of foreign currency translation(1)							(1,617	)
Net income attributable to HARMAN International Industries, Incorporated – local currency			43,226				3,873				1,016	%

 

(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
(In thousands; unaudited)		Three Months Ended June 30,								Increase (Decrease)
		2014				2013
Net sales – nominal currency		$	1,444,419			$	1,182,235				22	%
Effect of foreign currency translation(1)							22,907
Net sales – local currency			1,444,419				1,205,142				20	%
Gross profit – nominal currency			394,090				315,634				25	%
Effect of foreign currency translation(1)							4,089
Gross profit – local currency			394,090				319,723				23	%
SG&A & Other – nominal currency			273,514				228,158				20	%
Effect of foreign currency translation(1)							3,994
SG&A & Other – local currency			273,514				232,152				18	%
Operating income – nominal currency			120,576				87,476				38	%
Effect of foreign currency translation(1)							95
Operating income – local currency			120,576				87,571				38	%
Net income attributable to HARMAN International Industries, Incorporated – nominal currency			87,345				63,423				38	%
Effect of foreign currency translation(1)							(19	)
Net income attributable to HARMAN International Industries, Incorporated – local currency			87,345				63,404				38	%

 

(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)
		2014				2013
Net sales – nominal currency		$	5,348,483			$	4,297,842				24	%
Effect of foreign currency translation(1)							84,521
Net sales – local currency			5,348,483				4,382,363				22	%
Gross profit – nominal currency			1,456,667				1,104,120				32	%
Effect of foreign currency translation(1)							15,259
Gross profit – local currency			1,456,667				1,119,379				30	%
SG&A & Other – nominal currency			1,126,940				902,869				25	%
Effect of foreign currency translation(1)							15,452
SG&A & Other – local currency			1,126,940				918,321				23	%
Operating income – nominal currency			329,727				201,251				64	%
Effect of foreign currency translation(1)							(193	)
Operating income – local currency			329,727				201,058				64	%
Net income attributable to HARMAN International Industries, Incorporated – nominal currency			234,692				142,407				65	%
Effect of foreign currency translation(1)							1,003
Net income attributable to HARMAN International Industries, Incorporated – local currency			234,692				143,410				64	%

 

(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
(In thousands; unaudited)		Twelve Months Ended June 30,								Increase (Decrease)
		2014				2013
Net sales – nominal currency		$	5,348,483			$	4,297,842				24	%
Effect of foreign currency translation(1)							84,521
Net sales – local currency			5,348,483				4,382,363				22	%
Gross profit – nominal currency			1,465,505				1,139,524				29	%
Effect of foreign currency translation(1)							15,484
Gross profit – local currency			1,465,505				1,155,008				27	%
SG&A & Other – nominal currency			1,035,725				849,786				22	%
Effect of foreign currency translation(1)							12,598
SG&A & Other – local currency			1,035,725				862,384				20	%
Operating income – nominal currency			429,780				289,738				48	%
Effect of foreign currency translation(1)							2,885
Operating income – local currency			429,780				292,623				47	%
Net income attributable to HARMAN International Industries, Incorporated – nominal currency			308,208				214,410				44	%
Effect of foreign currency translation(1)							4,106
Net income attributable to HARMAN International Industries, Incorporated – local currency			308,208				218,516				41	%

 

(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

Reconciliation of GAAP to Non-GAAP Results

 

(In thousands, except earnings per share data; unaudited)		Three Months Ended June 30, 2014												Three Months Ended June 30, 2013
		GAAP				Adjustments				Non-GAAP				GAAP				Adjustments				Non-GAAP
HARMAN:
Operating Income			57,056				63,520				120,576				15,516				71,960				87,476
Depreciation & Amortization			35,026				(1,418	)			33,608				36,175				(3,116	)			33,059
EBITDA			92,082				62,102				154,184				51,691				68,844				120,535
INFOTAINMENT:
Operating Income			39,972				31,239				71,211				(5,334	)			49,282				43,948
Depreciation & Amortization			17,062				(1,398	)			15,664				16,577				(1,348	)			15,229
EBITDA			57,034				29,841				86,875				11,243				47,934				59,177
LIFESTYLE:
Operating Income			26,793				19,812				46,605				26,956				15,012				41,968
Depreciation & Amortization			9,490				0				9,490				10,061				(1,670	)			8,391
EBITDA			36,283				19,812				56,095				37,017				13,342				50,359
PROFESSIONAL:
Operating Income			37,360				3,278				40,638				25,503				7,665				33,168
Depreciation & Amortization			5,844				(16	)			5,828				6,416				(97	)			6,319
EBITDA			43,205				3,258				46,463				31,919				7,568				39,487

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.

 

18

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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, 2014												Twelve Months Ended June 30, 2013
		GAAP				Adjustments				Non-GAAP				GAAP				Adjustments				Non-GAAP
HARMAN:
Operating Income			329,727				100,053				429,780				201,251				88,487				289,738
Depreciation & Amortization			132,328				(6,959	)			125,369				128,169				(5,338	)			122,831
EBITDA			462,055				93,094				555,149				329,420				83,149				412,569
INFOTAINMENT:
Operating Income			195,403				54,717				250,120				90,799				60,222				151,021
Depreciation & Amortization			65,912				(6,219	)			59,693				63,008				(1,347	)			61,661
EBITDA			261,315				48,498				309,813				153,807				58,875				212,682
LIFESTYLE:
Operating Income			170,517				27,323				197,840				137,477				19,253				156,730
Depreciation & Amortization			34,581				(622	)			33,959				36,572				(3,818	)			32,754
EBITDA			205,098				26,701				231,799				174,049				15,435				189,484
PROFESSIONAL:
Operating Income			114,057				6,499				120,556				85,810				9,011				94,821
Depreciation & Amortization			20,866				(119	)			20,747				16,882				(171	)			16,711
EBITDA			134,923				6,380				141,303				102,692				8,840				111,532

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.

 

19

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HARMAN International Industries, Incorporated

Total Liquidity Reconciliation

 

Total Company Liquidity		June 30, 2014
$ millions
Cash & cash equivalents		$	581
Short-term investments			0
Available credit under Revolving Credit Facility			445
Total liquidity		$	1,026

 

20