Exhibit 99.1

 

 

Contact:
Christopher Ferris		Darrin Shewchuk
203.328.3500		203.328.3500
chris.ferris@harman.com		darrin.shewchuk@harman.com

HARMAN Reports Third Quarter Fiscal Year 2015 Results

 

•

Net sales increased 4% to $1.5 billion; Up 14% excluding foreign currency translation

 

•

Operational EPS up 9% to $1.22; Operational EBITDA up 8% to $150 million

 

•

Secured $3.2 billion of new automotive awards; $5.7 billion of awarded business year-to-date

 

•

Acquired Symphony Teleca and Redbend

STAMFORD, CT, April 30, 2015 – Harman International Industries, Incorporated (NYSE: HAR), the premier infotainment, audio and software services company, today announced results for the third quarter ended March 31, 2015.

Net sales for the third quarter were $1.46 billion, an increase of four percent compared to the same period in the prior year or 14 percent excluding the impact of foreign currency translation (ex-FX). Infotainment net sales increased six percent, or 19 percent (ex-FX), due to platform expansions, higher take rates, and stronger automotive production. Lifestyle net sales declined six percent (up two percent ex-FX). Last year’s third quarter benefited from an unusually large order from a mobile telecommunications customer. In the third quarter, stronger car audio sales partially offset this impact. Net sales in the Professional division increased 21 percent (26 percent ex-FX) primarily driven by the acquisition of AMX which expanded the Company’s product portfolio into enterprise automation and control and video switching.

Excluding restructuring and other non-recurring items, third quarter operating income was $114 million compared to $108 million in the same period in the prior year, and earnings per diluted share were $1.22 compared to $1.12 in the same period last year. On a GAAP basis, third quarter operating income was $92 million compared to $101 million in the same period in the prior year, and earnings per diluted share were $0.99 for the quarter compared to $1.05 in the same period in the prior year. The Company recorded $23 million of restructuring and non-recurring acquisition-related costs, compared to $7 million in the prior year.

“This marks the eighth consecutive quarter of top and bottom line growth. We delivered another solid quarter of growth, particularly in our automotive businesses, despite unprecedented foreign exchange headwinds. Our professional business was hit harder due to a strong US dollar and a softening in some emerging and European markets,” commented Dinesh C. Paliwal, the Company’s Chairman, President and Chief Executive Officer. “HARMAN continues to lead the industry with best-in-class connected car solutions, as evidenced by new awards for embedded infotainment and car audio systems from global industry leaders, including BMW and Daimler. Year-to-date, we have secured $5.7 billion of new automotive awards.”

Paliwal continued, “We also recently completed the acquisitions of Symphony Teleca and Redbend, which will give us immediate scale in software services and better position HARMAN to capitalize on the rapid growth of the Internet of Things. We can now deliver more powerful solutions at the intersection of cloud, mobility, and analytics for our core markets of automotive and the enterprise and diversify to a wider range of industries such as telecommunications, media, and retail.”

 

1

---

FY 2015 Key Figures – Total Company		Three Months Ended March 31																Nine Months Ended March 31
										Increase (Decrease)																Increase (Decrease)
$ millions (except per share data)		3M FY15				3M FY14				Including Currency Changes				Excluding Currency Changes1				9M FY15				9M FY14				Including Currency Changes				Excluding Currency Changes1
Net sales			1,464				1,404				4	%			14	%			4,477				3,904				15	%			20	%
Gross profit			418				365				15	%			23	%			1,326				1,066				24	%			29	%
Percent of net sales			28.6	%			26.0	%											29.6	%			27.3	%
SG&A			327				263				24	%			34	%			970				793				22	%			27	%
Operating income			92				101				(10	%)			(5	%)			356				273				31	%			36	%
Percent of net sales			6.2	%			7.2	%											8.0	%			7.0	%
EBITDA			132				134				(2	%)			4	%			471				370				27	%			32	%
Percent of net sales			9.0	%			9.6	%											10.5	%			9.5	%
Net Income attributable to HARMAN International Industries, Incorporated			70				73				(4	%)			(0	%)			270				191				41	%			47	%
Diluted earnings per share			0.99				1.05				(6	%)			(2	%)			3.83				2.74				40	%			46	%
Restructuring & non-recurring costs			23				7												48				37
Non-GAAP - operational1
Gross profit			422				367				15	%			23	%			1,318				1,071				23	%			28	%
Percent of net sales			28.8	%			26.1	%											29.4	%			27.4	%
SG&A			308				259				19	%			28	%			914				762				20	%			24	%
Operating income			114				108				6	%			12	%			404				309				31	%			36	%
Percent of net sales			7.8	%			7.7	%											9.0	%			7.9	%
EBITDA			150				139				8	%			15	%			511				401				28	%			33	%
Percent of net sales			10.2	%			9.9	%											11.4	%			10.3	%
Net Income attributable to HARMAN International Industries, Incorporated			87				78				11	%			17	%			305				221				38	%			44	%
Diluted earnings per share			1.22				1.12				9	%			15	%			4.33				3.16				37	%			43	%
Shares outstanding – diluted (in millions)			71				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 third quarter of fiscal 2015 increased 268 basis points to 28.8 percent. The improvement was primarily due to the impact of higher sales volume utilizing a more efficient fixed production cost base and the expansion of the Company’s product portfolio into enterprise automation and control and video switching.

In the third quarter of fiscal 2015, SG&A expense as a percentage of net sales increased 258 basis points to 21.0 percent on a non-GAAP basis, primarily due to higher marketing and research and development expenses and the expansion of the Company’s product portfolio into enterprise automation and control and video switching.

2015 Guidance Update

HARMAN updated its financial outlook for fiscal 2015. The Company now forecasts fiscal 2015 revenue of $6.0 billion and operational earnings per share of $5.65. The majority of the EPS reduction is related to weakness in certain geographic markets in our Professional business, with the remainder being foreign currency translation impact on the total Company. This revised guidance includes the closing of the Symphony Teleca and Redbend acquisitions, which will contribute approximately $100 million in revenue in the fourth quarter of FY 2015 and has no impact on operational earnings per share, as the net earnings from these acquisitions will be offset by financing costs and an increase in the Company’s share count.

 

August 2014

January 20151

April 20152

Revenue

~$

6.0 billion

~$

6.0 billion

~$

6.0 billion

EBITDA3

~$

685 million

~$

715 million

~$

695 million

EPS3

~$

5.25

~$

5.85

~$

5.65

Interest & Misc.

~$

27M

~$

23M

~$

17M

Tax Rate

~26

%

~24

%

~24

%

Share Count

~71 M

~70.5 M

~71 M

EUR/USD

1.35

1.22

4

1.19

5

 

2

---

1.	Excludes Redbend and Symphony Teleca.

2.	Includes Redbend and Symphony Teleca.

3.	Non-GAAP, excluding restructuring, non-recurring items, and purchase accounting expenses related to acquisitions.

4.	Assumed EUR/USD of 1.15 for the second half of fiscal 2015.

5.	Assumes EUR/USD of 1.08 for the fourth quarter of fiscal 2015.

Investor Call Today April 30th, 2015

At 11:00 a.m. EDT today, HARMAN’s management will host an analyst and investor conference call to discuss the third quarter results. Those who want to participate via audio in the earnings conference call should dial 1 (800) 735 5968 (U.S.) or +1 (212) 231 2902 (International) ten minutes before the call and reference HARMAN, Access Code: 21766413.

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 third quarter earnings release and supporting materials were posted on the site at approximately 8:00 a.m. EDT today.

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 Friday, July 31^st, 2015 at 1:00 p.m. EDT. To listen to the replay, dial 1 (800) 633 8284 (U.S.) or +1 (402) 977 9140 (International), Access Code: 21766413. 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 (harman.com) designs and engineers connected products and solutions for consumers, automakers, and enterprises worldwide, including audio, visual and infotainment systems; enterprise automation solutions; and software services. With leading brands including AKG®, Harman Kardon®, Infinity®, JBL®, Lexicon® , Mark Levinson ® and Revel®, HARMAN is admired by audiophiles, musicians and the entertainment venues where they perform around the world. HARMAN also is a technology and integration services leader for the Automotive, Mobile, Telecommunications and Enterprise markets. More than 25 million automobiles on the road today are equipped with HARMAN audio and infotainment systems. The Company’s software solutions power billions of mobile devices and systems that are connected, integrated, personalized, adaptive and secure across all platforms, from the work and home to car and mobile. HARMAN has a workforce of approximately 25,000 people across the Americas, Europe, and Asia and reported sales of $5.9 billion during the last 12 months ended March 31, 2015. 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, 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

 

3

---

Company’s ability to maintain a competitive technological advantage through innovation and leading product designs; (8) the Company’s ability to integrate successfully our recently completed and future acquisitions; (9) the Company’s failure to maintain the value of its brands and implementing a sufficient brand protection program; and (10) other risks detailed in Harman International Industries, Incorporated Annual Report on Form 10-K for the fiscal year ended June 30, 2014 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 from its customers. 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.

 

4

---

APPENDIX

Infotainment Division

 

FY 2015 Key Figures – Infotainment		Three Months Ended March 31																Nine Months Ended March 31
										Increase (Decrease)																Increase (Decrease)
$ millions (except per share data)		3M FY15				3M FY14				Including Currency Changes				Excluding Currency Changes1				9M FY15				9M FY14				Including Currency Changes				Excluding Currency Changes1
Net sales			779				736				6	%			19	%			2,302				2,066				11	%			18	%
Gross profit			180				158				15	%			25	%			553				464				19	%			25	%
Percent of net sales			23.2	%			21.4	%											24.0	%			22.5	%
SG&A			98				97				1	%			14	%			303				309				(2	%)			4	%
Operating income			82				60				36	%			42	%			249				155				60	%			66	%
Percent of net sales			10.5	%			8.2	%											10.8	%			7.5	%
EBITDA			99				77				29	%			37	%			301				204				47	%			53	%
Percent of net sales			12.7	%			10.5	%											13.1	%			9.9	%
Restructuring & non-recurring costs			1				3												5				23
Non-GAAP - operational1
Gross profit			182				160				14	%			25	%			557				469				19	%			25	%
Percent of net sales			23.3	%			21.7	%											24.2	%			22.7	%
SG&A			99				96				3	%			16	%			302				290				4	%			10	%
Operating income			83				63				31	%			37	%			255				179				42	%			47	%
Percent of net sales			10.6	%			8.6	%											11.1	%			8.7	%
EBITDA			99				78				27	%			35	%			303				223				36	%			41	%
Percent of net sales			12.7	%			10.6	%											13.1	%			10.8	%

 

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

Net sales in the third quarter of fiscal 2015 were $779 million, an increase of six percent compared to the same period in the prior year or 19 percent excluding the impact of foreign currency translation. The increase in net sales was due to the expansion of recently launched platforms, higher take rates, and stronger automotive production partially offset by unfavorable foreign currency translation.

On a non-GAAP basis in the third quarter of fiscal 2015, gross margin increased 159 basis points to 23.3 percent compared to the prior year primarily due to the impact of improved leverage on fixed production costs and benefits from footprint migration restructuring initiatives. SG&A spending decreased 42 basis points to 12.7 percent primarily due to improved operating leverage on higher sales.

Infotainment Division Highlights

HARMAN recently secured approximately $2.1 billion of new awards to design and build the next generation infotainment systems for BMW and Daimler. Both embedded systems will feature the most sophisticated connected car technologies, including over-the-air (OTA) updates.

HARMAN infotainment systems continued to be deployed across car lines globally. New vehicles entering the market with HARMAN designed and built infotainment systems included the new VW Touran, Skoda Superb, Seat Leon, Audi Q7 and R8, the BMW 1-series, Ssangyong Tivoli, Jaguar F-type, and Land Rover Evoque.

HARMAN also continues to demonstrate its leadership in advanced connectivity through numerous industry events and partnerships. At the Geneva International Motor Show, HARMAN displayed its vision for autonomous driving together with concept car producer Rinspeed. The electric vehicle was equipped with an intelligent HARMAN infotainment system featuring next-generation navigation, entertainment, driver assistance and service functions which continuously learn the habits and preferences of the driver and passengers to predict their actions. Using an integrated telematics communication module, the vehicle remains “future-proofed” through OTA updates and provides real-time analytics to extend system functionality. This enables high speed data streaming and vehicle-to-vehicle communication which will be fundamental to autonomous driving.

HARMAN announced it was a founding member of the University of Michigan Mobility Transformation Center Affiliates Program, a major research partnership of industry, government, and academia that is laying the foundation for a commercially viable system of connected and automated vehicles. HARMAN also announced its participation in the European FANCI (Face and Body Analysis Natural Computer Interaction) project. With funding from the European Union’s Research and Innovation program, the program will identify and integrate multi-modal human-machine technologies onto a single in-car computing platform. The project will aim to make advanced safety features such as facial recognition and body analytics an affordable and viable option for tomorrow’s advanced vehicles.

 

5

---

Lifestyle Division

 

FY 2015 Key Figures – Lifestyle		Three Months Ended March 31																Nine Months Ended March 31
										Increase (Decrease)																Increase (Decrease)
$ millions (except per share data)		3M FY15				3M FY14				Including Currency Changes				Excluding Currency Changes1				9M FY15				9M FY14				Including Currency Changes				Excluding Currency Changes1
Net sales			441				468				(6	%)			2	%			1,408				1,232				14	%			20	%
Gross profit			136				131				4	%			10	%			455				374				22	%			26	%
Percent of net sales			30.8	%			27.9	%											32.3	%			30.4	%
SG&A			91				79				15	%			23	%			303				230				32	%			36	%
Operating income			45				51				(12	%)			(8	%)			152				144				6	%			9	%
Percent of net sales			10.2	%			11.0	%											10.8	%			11.7	%
EBITDA			57				60				(5	%)			(1	%)			182				169				8	%			12	%
Percent of net sales			12.9	%			12.8	%											13.0	%			13.7	%
Restructuring & non-recurring costs			8				2												23				8
Non-GAAP - operational1
Gross profit			138				131				6	%			12	%			447				374				19	%			23	%
Percent of net sales			31.4	%			27.9	%											31.7	%			30.4	%
SG&A			86				78				11	%			18	%			272				223				22	%			26	%
Operating income			53				53				(1	%)			4	%			175				151				16	%			20	%
Percent of net sales			11.9	%			11.4	%											12.4	%			12.3	%
EBITDA			62				62				0	%			6	%			203				176				16	%			20	%
Percent of net sales			14.1	%			13.2	%											14.4	%			14.3	%

 

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

Net sales in the third quarter of fiscal 2015 were $441 million, a decrease of six percent compared to the same period in the prior year, or an increase of two percent excluding the impact of foreign currency translation. Last year’s third quarter benefited from an unusually large order from a mobile telecommunications customer. In the third quarter, stronger car audio sales partially offset this impact.

On a non-GAAP basis in the third quarter of fiscal 2015, gross margin improved by 346 basis points to 31.4 percent compared to the prior year due to product mix. SG&A expenses as a percentage of sales increased by 290 basis points to 19.5 percent, primarily due to increased investments in marketing and research and development.

Lifestyle Division Highlights

HARMAN secured new car audio awards from BMW, Ford, Fiat Chrysler, Geely, and Hyundai. HARMAN also won awards for its HALOsonic suite of sound management products. Fiat/Chrysler group will integrate HALOsonic Engine Order Cancellation (EOC) and microphone technologies into numerous vehicles. Daimler will add Internal Electronic Sound Synthesis (iESS), which creates speed and throttle-dependent sounds to improve engine feedback. Year to date, the Company has secured $1.6 billion of new awards.

At the HARMAN flagship store in New York City, Ford’s Lincoln division unveiled the new Lincoln Continental concept vehicle, which will feature HARMAN’s Revel sound system. At the same event, Ford also previewed the 2016 Lincoln MKX, which will be the first vehicle to market featuring Revel audio. Other car launches in the quarter included the Toyota Alphard (JBL) and the Hyundai Sonata Hybrid (Infinity). On March 31, 2015, HARMAN entered into an agreement to acquire the Bang & Olufsen (B&O) car audio business. HARMAN will assume all of B&O’s existing automotive programs, which include Audi, Aston Martin, and BMW. HARMAN will also leverage the distinctive B&O and B&O PLAY brands to pursue new business with the high-end luxury and mass luxury markets, respectively. The B&O brands will complement HARMAN’s industry leading portfolio of audio brands.

HARMAN also received 13 Red Dot (International) and 15 iF (Germany) new product and innovation awards for its home and multimedia products. To supplement HARMAN’s innovation pipeline, the Company recently announced a partnership with crowd-sourcing platform Quirky to jointly develop next generation audio products.

 

6

---

Professional Division

 

FY 2015 Key Figures – Professional		Three Months Ended March 31																Nine Months Ended March 31
										Increase (Decrease)																Increase (Decrease)
$ millions (except per share data)		3M FY15				3M FY14				Including Currency Changes				Excluding Currency Changes1				9M FY15				9M FY14				Including Currency Changes				Excluding Currency Changes1
Net sales			242				200				21	%			26	%			764				605				26	%			29	%
Gross profit			101				76				32	%			38	%			315				227				39	%			42	%
Percent of net sales			41.5	%			38.1	%											41.3	%			37.6	%
SG&A			84				52				64	%			72	%			240				151				59	%			64	%
Operating income			16				25				(35	%)			(33	%)			75				77				(2	%)			(1	%)
Percent of net sales			6.6	%			12.4	%											9.8	%			12.7	%
EBITDA			24				30				(19	%)			(16	%)			100				92				9	%			11	%
Percent of net sales			10.0	%			14.9	%											13.1	%			15.2	%
Restructuring & non-recurring costs			6				1												8				3
Non-GAAP - operational1
Gross profit			101				76				32	%			38	%			312				228				37	%			40	%
Percent of net sales			41.5	%			38.1	%											40.8	%			37.7	%
SG&A			79				50				56	%			65	%			229				148				55	%			59	%
Operating income			22				26				(16	%)			(14	%)			83				80				4	%			5	%
Percent of net sales			9.0	%			13.0	%											10.9	%			13.2	%
EBITDA			30				31				(4	%)			(1	%)			108				95				13	%			15	%
Percent of net sales			12.3	%			15.5	%											14.1	%			15.7	%

 

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

Net sales in the third quarter of fiscal 2015 were $242 million, an increase of 21 percent compared to the prior year, or 26 percent excluding foreign currency impact. The increase in net sales is due to the expansion of the Company’s product portfolio into enterprise automation and control and video switching. The strong US dollar is creating a competitive disadvantage as the majority of the business is transacted in US dollars. In addition, this business also has greater macro-economic exposure in the emerging markets where the economies have underperformed.

On a non-GAAP basis in the third quarter of fiscal 2015, gross margin increased 335 basis points to 41.5 percent, and SG&A expense as a percentage of sales increased 735 basis points to 32.5 percent compared to the prior year. It is important to note that the enterprise automation and control portfolio generates higher gross margins and has higher SG&A expenses. This business has seasonality and typically generates lower sales in the third quarter, resulting in lower leverage of its fixed cost base.

Professional Division Highlights

During the third quarter, the Company’s audio, video, lighting and enterprise automation and control system solutions were selected by leading system integrators and installers around the world. Notable projects included Auckland Airport, Hard Rock Hotel in Las Vegas, National Museum of Natural History in Paris, and the Council of European Union Headquarters in Brussels.

HARMAN’s products also powered a wide range of high-profile special events, music festivals and televised award shows including the 57th Annual GRAMMY™ Awards, the 48th Annual Super Bowl Halftime Show, and the iHeartRadio Music Festival.

The division launched 56 new products during the quarter. Several HARMAN products, including AKG’s studio headphones, JBL’s loudspeakers, Soundcraft’s mixing console, and DigiTech’s guitar pedal were honored with innovation awards from industry experts.

 

7

---

Other (Corporate)

 

FY 2015 Key Figures – Other		Three Months Ended March 31																Nine Months Ended March 31
										Increase (Decrease)																Increase (Decrease)
$ millions (except per share data)		3M FY15				3M FY14				Including Currency Changes				Excluding Currency Changes1				9M FY15				9M FY14				Including Currency Changes				Excluding Currency Changes1
SG&A			53				35				51	%			52	%			123				104				19	%			19	%
Restructuring & non-recurring costs			9				1												11				2
Non-GAAP - operational1
SG&A			44				34				28	%			29	%			111				101				10	%			10	%

 

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. It also includes the results and operations of Redbend Ltd., which the company acquired on February 26, 2015. Other SG&A increased $10 million to $44 million compared to the prior year period, primarily due to increased research and development investments in safety, security, and Redbend operations.

 

8

---

HARMAN International Industries, Incorporated

Consolidated Statements of Income

 

(In thousands, except earnings per share data; unaudited)		Three Months Ended March 31,								Nine Months Ended March 31,
		2015				2014				2015				2014
Net sales		$	1,464,193			$	1,404,235			$	4,476,664			$	3,904,064
Cost of sales			1,046,063				1,039,462				3,150,736				2,838,192
Gross profit			418,130				364,773				1,325,928				1,065,872
Selling, general and administrative expenses			326,623				263,340				969,881				793,201
Operating income			91,507				101,433				356,047				272,671
Other expenses:
Interest expense, net			3,001				2,111				7,861				5,936
Foreign exchange (gains) losses, net			(3,406	)			774				(4,366	)			4,745
Miscellaneous, net			2,294				2,682				6,932				5,803
Income before income taxes			89,618				95,866				345,620				256,187
Income tax expense, net			19,346				22,369				76,250				64,515
Equity in net loss of unconsolidated subsidiaries			23				112				23				206
Net income			70,249				73,385				269,347				191,466
Net income attributable to non-controlling interest			(46	)			0				(156	)			0
Net income attributable to HARMAN International Industries, Incorporated		$	70,295			$	73,385			$	269,503			$	191,466
Earnings per share:
Basic		$	1.00			$	1.06			$	3.87			$	2.77
Diluted		$	0.99			$	1.05			$	3.83			$	2.74
Weighted average shares outstanding:
Basic			69,946				68,939				69,557				69,067
Diluted			70,795				69,888				70,322				69,877

 

9

---

HARMAN International Industries, Incorporated

Consolidated Balance Sheets

 

(In thousands; unaudited)		March 31, 2015				June 30, 2014
ASSETS
Current Assets
Cash and cash equivalents		$	592,359			$	581,312
Receivables, net			952,672				894,579
Inventories			726,354				662,128
Other current Assets			471,227				320,852
Total current assets			2,742,612				2,458,871
Property, plant and equipment, net			462,903				509,856
Goodwill			710,599				540,952
Deferred tax assets, long-term, net			88,897				170,558
Other assets			712,854				445,353
Total assets		$	4,717,865			$	4,125,590
LIABILITIES AND EQUITY
Current liabilities
Current portion of long-term debt		$	0			$	35,625
Short-term debt			2,656				3,736
Accounts payable			809,829				697,553
Accrued liabilities			674,988				566,722
Accrued warranties			155,789				155,472
Income taxes payable			32,377				26,544
Total current liabilities			1,675,639				1,485,652
Borrowings under revolving credit facility			593,448				300,000
Long-term debt			25				219,407
Pension liability			165,341				186,352
Other non-current liabilities			118,707				141,158
Total liabilities			2,553,160				2,332,569
Total HARMAN International Industries, Incorporated shareholders’ equity			2,164,418				1,792,578
Noncontrolling interest			287				443
Total equity			2,164,705				1,793,021
Total liabilities and equity		$	4,717,865			$	4,125,590

 

10

---

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 March 31, 2015
		GAAP				Adjustments				Non-GAAP - Operational
Net sales		$	1,464,193			$	0			$	1,464,193
Cost of sales			1,046,063				(3,599	)a			1,042,464
Gross profit			418,130				3,599				421,729
Selling, general and administrative expenses			326,623				(18,999	)b			307,624
Operating income			91,507				22,598				114,105
Other expenses:
Interest expense, net			3,001				0				3,001
Foreign exchange gains, net			(3,406	)			0				(3,406	)
Miscellaneous, net			2,294				(0	)			2,294
Income before income taxes			89,618				22,598				112,216
Income tax expense, net			19,346				6,170	c			25,516
Equity in loss of unconsolidated subsidiary			23				0				23
Net income			70,249				16,428				86,677
Net income attributable to non-controlling interest			(46	)			0				(46	)
Net income attributable to HARMAN International Industries, Incorporated		$	70,295			$	16,428			$	86,723
Earnings per share:
Basic		$	1.00			$	0.23			$	1.24
Diluted		$	0.99			$	0.23			$	1.22
Weighted average shares outstanding:
Basic			69,946								69,946
Diluted			70,795								70,795

 

a)	Restructuring expense in Cost of Sales was $3.6 million for projects to increase manufacturing productivity.

b)	Restructuring expense in SG&A was $11.2 million primarily due to projects to increase productivity in engineering, manufacturing and administrative functions; other non-recurring expense included in SG&A was $7.8 million including M&A deal related expenses.

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 consolidated 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.

 

11

---

HARMAN International Industries, Incorporated

Consolidated Statement of Income

Reconciliation of GAAP to Non-GAAP Results

 

(In thousands except earnings per share data; unaudited)		Nine Months Ended March 31, 2015
		GAAP				Adjustments				Non-GAAP - Operational
Net sales		$	4,476,664			$	0			$	4,476,664
Cost of sales			3,150,736				8,014	a			3,158,750
Gross profit			1,325,928				(8,014	)			1,317,914
Selling, general and administrative expenses			969,881				(55,966	)b			913,915
Operating income			356,047				47,952				403,999
Other expenses:
Interest expense, net			7,861				0				7,861
Foreign exchange gains, net			(4,366	)			0				(4,366	)
Miscellaneous, net			6,932				0				6,932
Income before income taxes			345,620				47,952				393,572
Income tax expense, net			76,250				12,799	c			89,049
Equity in net loss of unconsolidated subsidiaries			23				0				23
Net income			269,347				35,153				304,500
Net income attributable to non-controlling interest			(156	)			0				(156	)
Net income attributable to HARMAN International Industries, Incorporated		$	269,503			$	35,153			$	304,656
Earnings per share:
Basic		$	3.87			$	0.51			$	4.38
Diluted		$	3.83			$	0.50			$	4.33
Weighted average shares outstanding:
Basic			69,557								69,557
Diluted			70,322								70,322

 

a)	Restructuring expense in Cost of Sales was $7.9 million for projects to increase manufacturing productivity, offset by a $15.9M accrual reversal for a US Customs / NAFTA related exposure.

b)	Restructuring expense in SG&A was $38.9 million primarily due to projects to increase productivity in engineering and administrative functions. Other non-recurring expense includes in SG&A was $17.1M including acquisition-related expenses.

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 has provided a reconciliation of non-GAAP measures in order to provide the users of these consolidated 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

---

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 March 31, 2014
		GAAP				Adjustments				Non-GAAP - Operational
Net sales		$	1,404,235			$	0			$	1,404,235
Cost of sales			1,039,462				(2,110	)a			1,037,352
Gross profit			364,773				2,110				366,883
Selling, general and administrative expenses			263,340				(4,535	)b			258,805
Operating income			101,433				6,645				108,078
Other expenses:
Interest expense, net			2,111				0				2,111
Foreign exchange losses, net			774				0				774
Miscellaneous, net			2,682				(0	)			2,682
Income before income taxes			95,866				6,645				102,511
Income tax expense, net			22,369				1,987	c			24,356
Equity in net loss of unconsolidated subsidiaries			112				0				112
Net income			73,385				4,658				78,043
Net income attributable to non-controlling interest			0				0				0
Net income attributable to HARMAN International Industries, Incorporated		$	73,385			$	4,658			$	78,043
Earnings per share:
Basic		$	1.06			$	0.07			$	1.13
Diluted		$	1.05			$	0.07			$	1.12
Weighted average shares outstanding:
Basic			68,939								68,939
Diluted			69,888								69,888

 

a)	Restructuring expense in Cost of sales was $2.1 million for projects to increase manufacturing productivity.

d)	Restructuring expense in SG&A was $2.6 million primarily due to projects to increase productivity in engineering and administrative functions. Other non-recurring expense included in SG&A was $1.9 million.

b)	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 has provided a reconciliation of non-GAAP measures in order to provide the users of these consolidated 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

---

HARMAN International Industries, Incorporated

Consolidated Statement of Income

Reconciliation of GAAP to Non-GAAP Results

 

(In thousands except earnings per share data; unaudited)		Nine Months Ended March 31, 2014
		GAAP				Adjustments				Non-GAAP - Operational
Net sales		$	3,904,064			$	0			$	3,904,064
Cost of sales			2,838,192				(5,543	)a			2,832,649
Gross profit			1,065,872				5,543				1,071,415
Selling, general and administrative expenses			793,201				(30,990	)b			762,211
Operating income			272,671				36,533				309,204
Other expenses:
Interest expense, net			5,936				0				5,936
Foreign exchange losses, net			4,745				0				4,745
Miscellaneous, net			5,803				(0	)			5,803
Income before income taxes			256,187				36,533				292,720
Income tax expense, net			64,515				7,137	c			71,652
Equity in net loss of unconsolidated subsidiaries			206				0				206
Net income			191,466				29,396				220,862
Net income attributable to non-controlling interest			0				0				0
Net income attributable to HARMAN International Industries, Incorporated		$	191,466			$	29,396			$	220,862
Earnings per share:
Basic		$	2.77			$	0.43			$	3.20
Diluted		$	2.74			$	0.42			$	3.16
Weighted average shares outstanding:
Basic			69,067								69,067
Diluted			69,877								69,877

 

a)	Restructuring expense in Cost of Sales was $6.1 million due to projects to increase productivity in manufacturing; other non- recurring expense included in Cost of Sales was income of $0.6 million.

b)	Restructuring expense in SG&A was $27.6 million primarily due to projects to increase productivity in engineering and administrative functions; other non-recurring expense in SG&A was 3.4 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 consolidated 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.

 

14

---

HARMAN International Industries, Incorporated

Selected Financial Data

Reconciliation of GAAP to Non-GAAP Results

Foreign Currency Translation Impact

 

(In thousands; unaudited)		Three Months Ended March 31,								Increase / (Decrease)
		2015				2014
Net sales - nominal currency		$	1,464,193			$	1,404,235				4	%
Effects of foreign currency translation (1)							(124,870	)
Net sales - local currency			1,464,193				1,279,365				14	%
Gross profit - nominal currency			418,130				364,773				15	%
Effects of foreign currency translation (1)							(24,565	)
Gross profit - local currency			418,130				340,208				23	%
SG&A - nominal currency			326,623				263,340				24	%
Effects of foreign currency translation (1)							(19,267	)
SG&A - local currency			326,623				244,073				34	%
Operating income - nominal currency			91,507				101,433				-10	%
Effects of foreign currency translation (1)							(5,298	)
Operating income - local currency			91,507				96,135				-5	%
Net income attributable to HARMAN International Industries, Incorporated - nominal currency			70,295				73,385				-4	%
Effects of foreign currency translation (1)							(2,876	)
Net income attributable to HARMAN International Industries, Incorporated - local currency			70,295				70,509				0	%

 

(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 these 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

---

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 March 31,								Increase / (Decrease)
		2015				2014
Net sales - nominal currency		$	1,464,193			$	1,404,235				4	%
Effects of foreign currency translation (1)							(124,870	)
Net sales - local currency			1,464,193				1,279,365				14	%
Gross profit - nominal currency			421,729				366,883				15	%
Effects of foreign currency translation (1)							(24,965	)
Gross profit - local currency			421,729				341,918				23	%
SG&A - nominal currency			307,624				258,805				19	%
Effects of foreign currency translation (1)							(18,740	)
SG&A - local currency			307,624				240,065				28	%
Operating income - nominal currency			114,105				108,078				6	%
Effects of foreign currency translation (1)							(6,224	)
Operating income - local currency			114,105				101,854				12	%
Net income attributable to HARMAN International Industries, Incorporated - nominal currency			86,723				78,043				11	%
Effects of foreign currency translation (1)							(3,803	)
Net income attributable to HARMAN International Industries, Incorporated - local currency			86,723				74,240				17	%

 

(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.

 

16

---

HARMAN International Industries, Incorporated

Selected Financial Data

Reconciliation of GAAP to Non-GAAP Results

Foreign Currency Translation Impact

 

(In thousands; unaudited)		Nine Months Ended March 31,								Increase / (Decrease)
		2015				2014
Net sales - nominal currency		$	4,476,664			$	3,904,064				15	%
Effects of foreign currency translation (1)							(179,247	)
Net sales - local currency			4,476,664				3,724,817				20	%
Gross profit - nominal currency			1,325,928				1,065,872				24	%
Effects of foreign currency translation (1)							(38,869	)
Gross profit - local currency			1,325,928				1,027,003				29	%
SG&A - nominal currency			969,881				793,201				22	%
Effects of foreign currency translation (1)							(28,658	)
SG&A - local currency			969,881				764,543				27	%
Operating income - nominal currency			356,047				272,671				31	%
Effects of foreign currency translation (1)							(10,211	)
Operating income - local currency			356,047				262,460				36	%
Net income attributable to HARMAN International Industries, Incorporated - nominal currency			269,503				191,466				41	%
Effects of foreign currency translation (1)							(7,876	)
Net income attributable to HARMAN International Industries, Incorporated - local currency			269,503				183,590				47	%
(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 these 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.

 

17

---

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)		Nine Months Ended March 31,								Increase / (Decrease)
		2015				2014
Net sales - nominal currency		$	4,476,664			$	3,904,064				15	%
Effects of foreign currency translation (1)							(179,247	)
Net sales - local currency			4,476,664				3,724,817				20	%
Gross profit - nominal currency			1,317,914				1,071,415				23	%
Effects of foreign currency translation (1)							(39,367	)
Gross profit - local currency			1,317,914				1,032,048				28	%
SG&A - nominal currency			913,915				762,211				20	%
Effects of foreign currency translation (1)							(27,707	)
SG&A - local currency			913,915				734,504				24	%
Operating income - nominal currency			403,999				309,204				31	%
Effects of foreign currency translation (1)							(11,660	)
Operating income - local currency			403,999				297,544				36	%
Net income attributable to HARMAN International Industries, Incorporated - nominal currency			304,656				220,862				38	%
Effects of foreign currency translation (1)							(9,324	)
Net income attributable to HARMAN International Industries, Incorporated - local currency			304,656				211,538				44	%
(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.

 

18

---

Harman International Industries, Incorporated

Reconciliation of GAAP to Non-GAAP Results

 

(In thousands, except earnings per share data; unaudited)		Three Months Ended March 31, 2015												Three Months Ended March 31, 2014
		GAAP				Adjustments				Non-GAAP - Operational				GAAP				Adjustments				Non-GAAP - Operational
HARMAN:
Operating income			91,507				22,598				114,105				101,433				6,645				108,078
Depreciation & Amortization			40,262				(4,552	)			35,710				33,063				(2,086	)			30,977
EBITDA			131,769				18,046				149,815				134,496				4,559				139,055
INFOTAINMENT:
Operating income			82,136				563				82,699				60,313				2,894				63,207
Depreciation & Amortization			17,122				(1,165	)			15,957				16,611				(2,087	)			14,524
EBITDA			99,258				(602	)			98,656				76,924				807				77,731
LIFESTYLE
Operating income			45,078				7,505				52,583				51,381				1,801				53,182
Depreciation & Amortization			11,795				(2,323	)			9,472				8,635				0				8,635
EBITDA			56,873				5,182				62,055				60,016				1,801				61,817
PROFESSIONAL
Operating income			16,043				5,659				21,702				24,813				1,150				25,963
Depreciation & Amortization			8,129				(98	)			8,031				5,104				1				5,105
EBITDA			24,172				5,561				29,733				29,917				1,151				31,068

HARMAN has provided a reconciliation of non-GAAP measures in order to provide the users of these consolidated 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

---

Harman International Industries, Incorporated

Reconciliation of GAAP to Non-GAAP Results

 

(In thousands, except earnings per share data; unaudited)		Nine Months Ended March 31, 2015												Nine Months Ended March 31, 2014
		GAAP				Adjustments				Non-GAAP - Operational				GAAP				Adjustments				Non-GAAP - Operational
HARMAN:
Operating income			356,047				47,952				403,999				272,671				36,533				309,204
Depreciation & Amortization			114,808				(7,337	)			107,471				97,302				(5,541	)			91,761
EBITDA			470,855				40,615				511,470				369,973				30,992				400,965
INFOTAINMENT:
Operating income			249,362				5,248				254,610				155,431				23,479				178,910
Depreciation & Amortization			51,801				(3,828	)			47,973				48,851				(4,823	)			44,028
EBITDA			301,163				1,420				302,583				204,282				18,656				222,938
LIFESTYLE
Operating income			151,655				23,299				174,954				143,725				7,510				151,235
Depreciation & Amortization			30,741				(2,379	)			28,362				25,091				(621	)			24,470
EBITDA			182,396				20,920				203,316				168,816				6,889				175,705
PROFESSIONAL
Operating income			75,128				7,910				83,038				76,697				3,220				79,917
Depreciation & Amortization			24,650				(165	)			24,485				15,020				(97	)			14,923
EBITDA			99,778				7,745				107,523				91,717				3,123				94,840

HARMAN has provided a reconciliation of non-GAAP measures in order to provide the users of these consolidated 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.

 

20

---

HARMAN International Industries, Incorporated

Total Liquidity Reconciliation

 

Total Company Liquidity		March 31, 2015
$ millions
Cash & cash equivalents		$	592
Short-term investments			0
Available credit under Revolving Credit Facility			602
Total Liquidity		$	1,194

 

21