Exhibit 99.1

 

For Immediate Release
						Contact: Robert V. Lardon
						203.328.3500 robert.lardon@harman.com

HARMAN Full Year Sales Up 12%; Operating Income Increases 122% to $190M; Cash Increases to $921M

 

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Seventh consecutive quarter of year-over-year improvement in sales and earnings

 

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Q4 EPS of $0.34 impacted by $0.13 due to temporary interruption of higher margin audio business

 

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Global market share gains continue as full-year sales in BRIC countries increase by 68%

 

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Awarded business grows to $14.5B, with $4.4B in higher-margin scalable platform

 

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Launched Toyota Entune™; first scalable infotainment platform in Europe and North America

Stamford, CT, August 10, 2011 – Harman International Industries, Incorporated, the leading global audio and infotainment group (NYSE: HAR), today announced results for the fourth quarter and fiscal year ended June 30, 2011.

The Company also noted, that in a separate release, it was reorganizing its businesses in order to unlock earnings growth and to better align with consumer lifestyle preferences. While the Company’s Professional Division will remain largely unaffected, the Company will reorganize its Automotive and Consumer Divisions to create two new Divisions, Infotainment and Lifestyle.

Net sales for the fiscal year were $3.8 billion, an increase of 12 percent compared to the prior year. Excluding foreign currency translation, net sales increased by 13 percent. On a GAAP basis, operating profit from continuing operations increased by 122 percent to $190 million compared to $86 million in fiscal 2010. Excluding restructuring expenses, annual operating profit from continuing operations was $211 million, an increase of 82% compared to $116 million in fiscal 2010. On the same non-GAAP basis, earnings per diluted share from continuing operations were $2.08 for the year, an increase of 145 percent versus $0.85 reported in the prior year. On a GAAP basis, earnings per diluted share from continuing operations were $1.90 for the year compared to $0.50 in the prior year.

Net sales for the fourth quarter were $1,031 million, an increase of 21 percent compared to the same period last year. Excluding foreign currency translation, net sales increased by 12 percent. Fourth quarter operating income was $26 million, compared to $26 million in the same period last year. Excluding restructuring charges, operating profit from continuing operations in the fourth quarter grew by 17 percent to $35 million, compared to $30 million in the same period last year. On the same non-GAAP basis, earnings per diluted share from continuing operations were $0.34 for the quarter compared to $0.30 in the same period last year. On a GAAP basis, earnings from continuing operations per diluted share were $0.26 for the quarter, the same as last year.

During this quarter, the Company’s profit margins were impacted by four discrete issues. First, earnings were significantly affected by higher overall infotainment sales while we experienced a decline of higher margin branded audio sales to Japanese customers due to the tsunami earthquake disaster. The Company believes that this effect, an approximate $15 million reduction of operating income in the fourth quarter, is temporary. The Company further noted that vehicle production related to these customers has already begun to improve and is expected to normalize in the near term. Second, the Company incurred $3.7 million of expense for a customer claim related to a software fix. Third, we were not able to realize some $8 million of planned price reductions from our suppliers due to tighter component supply and raw materials. Finally, the Company incurred $2.0 million in higher costs for neodymium magnets, a key high-performance speaker component.

At June 30, 2011, the Company’s cash and short term investments balance was $921 million, compared to $767 million as of March 31, 2011. This increase was primarily the result of positive cash from operations.

Dinesh C. Paliwal, the Company’s Chairman, President and CEO, said, “With a double digit sales increase and operating income more than doubling, we are proud of our continued improvements to the top and bottom line for the year. With 200 new patent disclosures this year added to our 2,500 active patents, our investments in research and development continue to create a competitive advantage and growth opportunity while enhancing our position as one of the world’s leading technology companies. We believe that our leadership in technology and our rapid emerging market growth will enable the Company to prosper, even in a continued difficult global macro-economic environment.”

To create superior value for its shareholders, the Company noted that it will continue to invest in organic growth initiatives such as investments in BRIC countries, which have resulted in 68% profitable annual growth in the last year. It also continues to pursue accretive strategic acquisitions, such as Aha Mobile and MWM Acoustics, which are expanding its

 

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technology solutions within the core businesses. Additionally, it will continue to evaluate share buy-back opportunities and is committed to providing a sustainable dividend. In fiscal 2011 the Company increased the dividend to $0.30 per share.

“Operationally, our business is in great shape, but recent price increases and supply constraints of rare earth minerals, specifically neodymium, will increase our gross costs by $85 million in fiscal 2012,” said Paliwal. “To date, we have been able to identify some $30 million cost mitigation actions. In coming months, we will continue to work with our product design teams for material substitution, and price increases to distributors, channel partners and automakers to further lower this cost impact. We believe by the end of the first quarter of fiscal 2012, we will have much better information about our customer negotiations and product design changes. We will update the market on this issue together with our next earnings release. In spite of these headwinds, we expect our overall year-over-year profitability to improve.”

“The consumer trends toward seamless, energy efficient and safe connectivity is guiding our innovation strategy and will drive growth not only in automotive infotainment but in our lifestyle premium audio products as well,” added Paliwal. “HARMAN will seize these opportunities with a leaner cost base, an expanded product portfolio and a more customer-focused organization. Looking at the year ahead, we are confident that we have the right strategy to continue to take market share and improve profitability.”

Summary of Continuing Operations – Gross Margin and SG&A

Gross margin on a GAAP basis decreased 0.1 percentage points to 26.2 percent in fiscal 2011. The decrease in gross profit as a percentage of net sales was primarily due to unfavorable product mix, specifically an increase in lower margin infotainment business and a temporary reduction in higher margin audio business due to customer production facility shutdowns as a result of the tsunami earthquake in Japan.

SG&A and Other expense as a percentage of sales on a non-GAAP basis in fiscal 2011 declined 2.3 percentage points to 20.7 percent and, in the fourth quarter, declined 2.2 percentage points to 20.6 percent. These improvements are primarily a result of our STEP Change savings activities as well as better leverage on our increased sales volume. HARMAN exceeded its $400 million STEP Change permanent cost-savings target, achieving $434 million in permanent savings.

 

FY 2011 Key Figures – Total Company		Three Months Ended June 30																Twelve Months Ended June 30
All figures from continuing operations unless otherwise noted										Increase (Decrease)																Increase (Decrease)
$ millions (except per share data)		3M FY11				3M FY10				Including Currency Changes				Excluding Currency Changes2				12M FY11				12M FY10				Including Currency Changes				Excluding Currency Changes2
Net sales			1,031				851				21	%			12	%			3,772				3,364				12	%			13	%
Gross profit			245				224				10	%			2	%			987				885				12	%			12	%
Percent of net sales			23.8	%			26.3	%											26.2	%			26.3	%
SG&A & Other			219				198				11	%			4	%			797				800				0	%			1	%
Operating income (loss)			26				26				1	%			(8	%)			190				86				122	%			112	%
Percent of net sales			2.5	%			3.0	%											5.0	%			2.5	%
Net Income (loss) from continuing operations attributable to Harman International Industries, Incorporated			19				18				2	%			(8	%)			136				35				286	%			251	%
Diluted earnings (loss) per share from continuing operations attributable to Harman International Industries, Incorporated			0.26				0.26												1.90				0.50
Restructuring-related costs			9				4												21				18
Goodwill impairment charge			0				0												0				12
Net Income from discontinued operations			0				115												0				124
Diluted earnings (loss) per share from Discontinued Operations			0				1.63												0				1.75
Non-GAAP from continuing operations
Gross profit1			247				224				10	%			3	%			991				890				11	%			12	%
Percent of net sales1			23.9	%			26.3	%											26.3	%			26.4	%
SG&A & Other1			212				194				9	%			2	%			781				774				1	%			2	%
Operating income (loss)1			35				30				17	%			8	%			211				116				82	%			77	%
Percent of net sales1			3.4	%			3.5	%											5.6	%			3.4	%
Net Income (loss)1 from continuing operations attributable to Harman International Industries, Incorporated			24				21				14	%			4	%			149				60				148	%			138	%
Diluted earnings (loss) per share1 from continuing operations attributable to Harman International Industries, Incorporated			0.34				0.30												2.08				0.85
Shares outstanding – diluted (in millions)			72				71												72				71
1,2    A non-GAAP measure, see reconciliations of non-GAAP measures later in this release. n.m. = Not Meaningful

 

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Investor Call on August 10, 2011

11:00 a.m. EDT: HARMAN will conduct an investor and analyst call hosted by CEO, Dinesh Paliwal, and CFO, Herbert Parker. Those who wish to participate via audio in the earnings conference call scheduled at 11:00 a.m. EDT should dial 1.800-893-3796 (U.S.) or +1 (212) 231-2906 (International) ten minutes before the call and reference HARMAN Access Code 21529483. A replay of the call will also be available following its completion at approximately 1:00 pm EDT. The replay will be available through October 10, 2011 at 1:00 pm EDT. To listen to the replay, dial 1(800) 633-8284 (U.S.) or +1 (402) 977-9140 (International), Access Code: 21529483.

NOTE: For reference during its analyst and investor conference call, the Company has posted a set of informational slides on its web site at www.harman.com and accompanying this press release on www.businesswire.com.

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.

General Information

HARMAN (www.harman.com) designs, manufactures and markets a wide range of audio and infotainment solutions for the automotive, consumer and professional markets – supported by 15 leading brands, including AKG, Harman Kardon, Infinity, JBL, Lexicon and Mark Levinson. The company is admired by audiophiles across multiple generations and supports leading professional entertainers and the venues where they perform. More than 20 million automobiles on the road today are equipped with HARMAN audio and infotainment systems. HARMAN has a workforce of about 12,000 people across the Americas, Europe and Asia, and reported sales of $3.8 billion for the fiscal year ended June 30, 2011. 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 are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act. One should not place undue reliance on these statements. We base these statements on particular assumptions that we have made in light of our industry experience, as well as our perception of historical trends, current market conditions, current economic data, expected future developments and other factors that we believe are appropriate under the circumstances. These statements involve risks and uncertainties that could cause actual results to differ materially from those suggested in the forward-looking statements, including but not limited to: (1) our ability to maintain profitability in our automotive division if there are delays in our 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) warranty obligations for defects in our products; (4) fluctuations in currency exchange rates, particularly with respect to the value of the U.S. Dollar and the Euro; (5) our ability to successfully implement our global footprint initiative, including achieving cost reductions and other benefits in connection with the restructuring of our manufacturing, engineering, procurement and administrative organizations; (6) 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; (7) the inability of our suppliers to deliver products at the scheduled rate and disruptions arising in connection therewith; (8) our ability to attract and retain qualified senior management and to prepare and implement an appropriate succession plan for our critical organizational positions; (9) our failure to implement and maintain a comprehensive disaster recovery program; (10) our failure to comply with governmental rules and regulations, including the Foreign Corrupt Practices Act and U.S. export control laws, and the cost of compliance with such laws; (11) our ability to maintain a competitive technological advantage through innovation and leading product designs; (12) our failure to maintain the value of our brands and implementing a sufficient brand protection program; (13) acceptance of our mid-platform infotainment systems by original equipment manufacturers and consumers; (14) the outcome of pending or future litigation and other claims, including, but not limited to, the current stockholder and Employee Retirement Income Security Act of 1974 lawsuits; (15) our ability to enforce or defend our ownership and use of intellectual property rights; and (16) other risks detailed in Harman International Industries, Incorporated (“Harman” or “the Company”) ) Annual Report on Form 10-K for the fiscal year ended June 30, 2011 and other filings made by Harman with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise any forward-looking statement except as required by law. These supporting slide materials also make reference to the Company’s sales backlog. The Company’s sales backlog reflects anticipated net sales from formally awarded new programs and open replacement programs, less phased-out and cancelled programs. The sales backlog may be impacted by various assumptions embedded in the calculation, including vehicle production levels on new and replacement programs, foreign currency exchange rates and the timing of major program launches.

HAR-E

 

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APPENDIX

Automotive Division

 

		Three Months Ended June 30																Twelve Months Ended June 30
FY 2011 Key Figures – Automotive										Increase (Decrease)																Increase (Decrease)
$ millions		3M FY11				3M FY10				Including Currency Changes				Excluding Currency Changes2				12M FY11				12M FY10				Including Currency Changes				Excluding Currency Changes2
Net sales			760				627				21	%			11	%			2,738				2,468				11	%			12	%
Gross profit			151				149				1	%			(6	%)			621				587				6	%			7	%
Percent of net sales			19.8	%			23.7	%											22.7	%			23.8	%
SG&A & Other			122				115				6	%			(3	%)			444				499				(11	%)			(9	%)
Operating income (loss)			29				34				(16	%)			(20	%)			177				88				101	%			91	%
Percent of net sales			3.8	%			5.4	%											6.5	%			3.6	%
Restructuring-related costs			2				(1	)											12				5
Goodwill impairment charge			0				0												0				12
Non-GAAP
Gross profit1			152				149				2	%			(5	%)			626				590				6	%			7	%
Percent of net sales1			20.1	%			23.7	%											22.9	%			23.9	%
SG&A & Other1			122				116				5	%			(4	%)			436				484				(10	%)			(8	%)
Operating income (loss)1			31				33				(7	%)			(12	%)			190				105				80	%			74	%
Percent of net sales1			4.1	%			5.3	%											6.9	%			4.3	%
1,2    A non-GAAP measure, see reconciliations of non-GAAP measures later in this release. n.m. = Not Meaningful

Automotive Division net sales in fiscal 2011 were $2.7 billion, an increase of 11 percent, or 12 percent when adjusted for constant currency, compared to the prior year. Gross margin on a non-GAAP basis in fiscal 2011 decreased 1.0 percentage point to 22.9 percent.

SG&A and Other expense on a non-GAAP basis in fiscal 2011 was $436 million compared to $484 million in the prior year. This improvement is primarily related to STEP Change initiatives, engineering footprint optimization and benefit from monetization of IP rights. As a percentage of sales, SG&A declined by 3.7 percentage points to 15.9 percent.

Net sales in the fourth quarter were $760 million, an increase of 21 percent, or 11 percent when adjusted for constant currency. Gross margin on a non-GAAP basis in the fourth quarter decreased 3.6 percentage points to 20.1 percent. . As described above, the quarterly gross margin was significantly affected by the decline of higher margin branded audio sales to Japanese customers due to the tsunami earthquake disaster. The Company believes that this effect, which is estimated to have accounted for approximately $15 million of gross profit in the fourth quarter, is temporary. The Company further noted that production related to these customers has already begun to improve and is expected to normalize in the near term. Additionally, the Company incurred $3.7 million of expense for a customer claim related to a software fix. Also during the quarter, we were not able to recoup some $8 million of planned price reductions from our suppliers due to tighter component supply and raw materials. Finally, the automotive division incurred $1.5 million in higher costs for neodymium magnets, a key high-performance speaker component.

SG&A and Other expense on a non-GAAP basis in the fourth quarter was $122 million compared to $116 million in the prior year. As a percentage of sales, SG&A declined 2.4 percentage points to 16.0 percent.

Automotive Division Highlights

HARMAN received significant awards from major automakers over the last twelve months including additional $700 million business from Chrysler/Fiat group, increasing our higher margin scalable infotainment platform order volume to $4.4B. Rapid adoption of the Company’s scalable infotainment platform for both mid- and high-end solutions was evidenced by wins from VW Group, and Chrysler Fiat Group. Higher margin Scalable platform awarded business now totals approximately 40 percent of the Company’s total awarded infotainment business. Awards for the Company’s Branded Audio solutions came from Maserati, Ferrari, BMW Group, China’s Geely, BYD and BYD Daimler Benz (GreenEdge).

Of particular note, HARMAN successfully launched the first scalable platform for Toyota, called Entune™, for its European and North American markets. Other Harman system launches were included in the new Audi A7, A6 Limousine, Q3 and A1; Land Rover and Range Rover models; Mercedes-Benz CLS; Peugeot 508; Ferrari FF; and Porsche Panamera and Cayenne.

 

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Consumer Division

 

		Three Months Ended June 30																Twelve Months Ended June 30
FY 2011 Key Figures – Consumer										Increase (Decrease)																Increase (Decrease)
$ millions		3M FY11				3M FY10				Including Currency Changes				Excluding Currency Changes2				12M FY11				12M FY10				Including Currency Changes				Excluding Currency Changes2
Net sales			100				81				24	%			14	%			420				373				13	%			14	%
Gross profit			25				19				31	%			19	%			118				99				19	%			21
Percent of net sales			25.5	%			24.0	%											28.1	%			26.6	%
SG&A & Other			33				30				9	%			3	%			116				104				11	%			11	%
Operating income (loss)			(7	)			(11	)			30	%			29	%			2				(5	)			n.m.				n.m.
Percent of net sales			(7.5	%)			(13.3	%)											0.6	%			(1.3	%)
Restructuring-related costs			3				4												5				8
Goodwill impairment charge			0				0												0				0
Non-GAAP
Gross profit1			25				19				31	%			20	%			118				99				19	%			21	%
Percent of net sales1			25.5	%			24.0	%											28.1	%			26.6	%
SG&A & Other1			30				26				15	%			7	%			111				96				15	%			15	%
Operating income (loss)1			(5	)			(7	)			33	%			31	%			7				3				161	%			n.m.
Percent of net sales1			(4.7	%)			(8.5	%)											1.7	%			0.7	%
1,2    A non-GAAP measure, see reconciliations of non-GAAP measures later in this release. n.m. = Not Meaningful

Consumer Division net sales in fiscal 2011 were $420 million, an increase of 13 percent, or 14 percent when adjusted for constant currency, compared to the prior year. Gross margin on a non-GAAP basis in fiscal 2011 increased 1.5 percentage points to 28.1 percent. As a percentage of sales, SG&A increased 0.5 percentage points to 26.4 percent.

Net sales in the fourth quarter were $100 million, an increase of 24 percent, or 14 percent when adjusted for constant currency. Gross margin on a non-GAAP basis in the fourth quarter increased 1.5 percentage points to 25.5 percent. SG&A expense on a non-GAAP basis in the fourth quarter declined 2.4 percentage points to 30.2 percent.

Consumer Division Highlights

HARMAN investments in China have yielded a near 300% increase in revenues, thanks to new retail channels, including our inaugural Flagship Store in Shanghai, and an expanded distributor network. In India, momentum is building from a strong foundation in Mobile Aftermarket, and new multimedia product introductions have helped increase revenue by 70%. In addition, a seamless integration of Selenium into Harman has delivered growth of 45% in the Brazilian market.

 

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Professional Division

 

		Three Months Ended June 30																Twelve Months Ended June 30
FY 2011 Key Figures – Professional										Increase (Decrease)																Increase (Decrease)
$ millions		3M FY11				3M FY10				Including Currency Changes				Excluding Currency Changes2				12M FY11				12M FY10				Including Currency Changes				Excluding Currency Changes2
Net sales			171				142				20	%			16	%			613				523				17	%			16	%
Gross profit			69				55				25	%			21	%			247				203				22	%			21	%
Percent of net sales			40.2	%			38.7	%											40.3	%			38.7	%
SG&A & Other			42				32				32	%			25	%			153				127				20	%			19	%
Operating income (loss)			26				23				16	%			14	%			94				75				25	%			24	%
Percent of net sales			15.4	%			16.0	%											15.3	%			14.4	%
Restructuring-related costs			4				1												3				5
Goodwill impairment charge			0				0												0				0
Non-GAAP
Gross profit1			69				55				25	%			21	%			246				205				21	%			20	%
Percent of net sales1			40.2	%			38.7	%											40.2	%			39.1	%
SG&A & Other1			38				31				22	%			17	%			149				124				20	%			19	%
Operating income (loss)1			30				24				28	%			25	%			97				80				21	%			20	%
Percent of net sales1			17.8	%			16.7	%											15.8	%			15.3	%

 

1,2	A non-GAAP measure, see reconciliations of non-GAAP measures later in this release. n.m. = Not Meaningful

Professional Division net sales in fiscal 2011 were $613 million, an increase of 17 percent, or 16 percent when adjusted for constant currency, compared to the prior year. Gross margin on a non-GAAP basis in fiscal 2011 increased 1.1 percentage points to 40.2 percent. SG&A expense on a non-GAAP basis in fiscal 2011 as a percentage of sales increased by 0.5 percentage points to 24.3 percent.

Net sales in the fourth quarter were $171 million, an increase of 20 percent, or 16 percent when adjusted for constant currency. Gross margin on a non-GAAP basis in the fourth quarter increased 1.5 percentage points to 40.2 percent. SG&A expense on a non-GAAP basis in the fourth quarter increased as a percentage of sales by 0.4 percentage points to 22.4 percent.

Professional Division Highlights

HARMAN continued to introduce advanced technologies around the world. This included the first ever professional-grade complete system application of the Ethernet AVB protocol which will allow time-synchronized, streaming audio and video.

HARMAN has recently appointed new sales & marketing resources in China and India, supporting its growth strategy in sectors such as cinema, entertainment, and installed sound. In North America, the Professional Division’s three mobile demonstration showrooms are taking the Harman audio experience on the road at such events as the Architectural Digest Show in New York and the Newport Film Festival in California.

 

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Other (Corporate)

 

		Three Months Ended June 30																Twelve Months Ended June 30
FY 2011 Key Figures – Other										Increase (Decrease)																Increase (Decrease)
$ millions		3M FY11				3M FY10				Including Currency Changes				Excluding Currency Changes2				12M FY11				12M FY10				Including Currency Changes				Excluding Currency Changes2
SG&A & Other			22				21				5	%			5	%			84				69				22	%			22	%
Restructuring-related costs			0				0												0				0
Non-GAAP
SG&A & Other1			22				21				6	%			6	%			84				69				23	%			23	%

 

1,2	A non-GAAP measure, see reconciliations of non-GAAP measures later in this release.

The full year SG&A expense increase is primarily due to investments in corporate technology, innovation and marketing programs. The Company’s Corporate Technology Center (CTC) is driving cutting-edge development in connectivity and networking, mobile Internet (Aha Radio), cloud computing, advanced driver assistance, wireless technologies, and energy-efficiency.

 

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Harman International Industries, Incorporated

Consolidated Statements of Operations

 

		Three Months Ended June 30,								Twelve Months Ended June 30,
(In thousands, except earnings per share data; unaudited)		2011				2010				2011				2010
Net sales		$	1,031,122			$	850,716			$	3,772,345			$	3,364,428
Cost of sales			785,908				627,052				2,784,995				2,479,270
Gross profit			245,214				223,664				987,350				885,158
Selling, general and administrative expenses			219,701				198,134				813,809				774,189
Loss on deconsolidation of variable interest entity			0				0				0				13,122
Sale of Intellectual Property			(327	)			0				(16,510	)			0
Goodwill impairment			0				0				0				12,292
Operating income			25,839				25,530				190,051				85,555
Other expenses:
Interest expense, net			5,404				6,266				22,576				30,215
Miscellaneous, net			1,859				2,542				7,255				6,263
Income from continuing operations before taxes			18,576				16,722				160,220				49,077
Income tax expense			(300	)			(1,715	)			24,304				8,610
Income from continuing operations net of taxes			18,876				18,437				135,916				40,467
Income from discontinued operations net of taxes			0				115,446				0				123,591
Net income			18,876				133,883				135,916				164,058
Less: Net income attributable to non-controlling interest			0				0				0				5,289
Net income attributable to Harman International Industries, Incorporated		$	18,876			$	133,883			$	135,916			$	158,769
Net income from continuing operations attributable to Harman International Industries, Incorporated:
Income from continuing operations, net of taxes		$	18,876			$	18,437			$	135,916			$	40,467
Less: Net income attributable to non-controlling interest			0				0				0				5,289
Net income from continuing operations attributable to Harman International Industries, Incorporated		$	18,876			$	18,437			$	135,916			$	35,178
Earnings per share from continuing operations attributable to Harman International Industries, Incorporated:
Basic		$	0.27			$	0.26			$	1.91			$	0.50
Diluted		$	0.26			$	0.26			$	1.90			$	0.50
Earnings per share from discontinued operations:
Basic		$	0.00			$	1.64			$	0.00			$	1.76
Diluted		$	0.00			$	1.63			$	0.00			$	1.75
Earnings per share:
Basic		$	0.27			$	1.90			$	1.91			$	2.26
Diluted		$	0.26			$	1.89			$	1.90			$	2.25
Weighted average shares outstanding:
Basic			71,222				70,584				70,992				70,350
Diluted			71,970				70,927				71,635				70,595

 

8

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Harman International Industries, Incorporated

Consolidated Balance Sheets

 

(In thousands; unaudited)		June 30, 2011				June 30, 2010
ASSETS
Current assets
Cash and cash equivalents		$	603,892			$	645,570
Short-term investments			317,322				0
Accounts receivable			579,272				517,092
Inventories			423,137				353,123
Other current assets			184,532				158,194
Total current assets			2,108,155				1,673,979
Property, plant and equipment			470,300				421,949
Goodwill			119,357				105,922
Deferred tax assets, long term			229,941				247,602
Other assets			130,742				106,763
Total assets		$	3,058,495			$	2,556,215
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Current portion of long-term debt		$	386			$	463
Short-term debt			1,785				13,472
Accounts payable			473,486				382,985
Accrued liabilities			436,537				363,261
Accrued warranties			122,396				99,329
Income taxes payable			12,991				3,941
Total current liabilities			1,047,581				863,451
Convertible senior notes			378,401				362,693
Other senior debt			0				1,209
Other non-current liabilities			208,855				193,970
Total liabilities			1,634,837				1,421,323
Total equity			1,423,658				1,134,892
Total liabilities and equity		$	3,058,495			$	2,556,215

 

9

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Harman International Industries, Incorporated

Reconciliation of GAAP to Non-GAAP Results

 

		Three Months Ended June 30, 2011
(In thousands, except earnings per share data; unaudited)		GAAP				Adjustments				Non-GAAP
Net sales		$	1,031,122			$	0			$	1,031,122
Cost of sales			785,908				(1,736	)a			784,172
Gross profit			245,214				1,736				246,950
Selling, general and administrative expenses			219,701				(7,195	)b			212,506
Loss on deconsolidation of variable interest entity			0				0				0
Sale of Intellectual Property			(326	)			0				(326	)
Goodwill impairment			0				0				0
Operating income			25,839				8,931				34,770
Other expenses:
Interest expense, net			5,404				0				5,404
Miscellaneous, net			1,859				0				1,859
Income from continuing operations before taxes			18,576				8,931				27,507
Income tax expense			(300	)			3,674	c			3,374
Income from continuing operations net of taxes			18,876				5,257				24,133
Less: Net income attributable to non-controlling interest			0				0				0
Net income from continuing operations attributable to Harman International Industries, Incorporated		$	18,876			$	5,257			$	24,133
Earnings per share from continuing operations attributable to Harman International Industries, Incorporated:
Basic		$	0.27			$	0.07			$	0.34
Diluted		$	0.26			$	0.07			$	0.34
Weighted average shares outstanding:
Basic			71,222								71,222
Diluted			71,970								71,970

 

(a)	Restructuring expense in Cost of Sales was $1.7 million due to projects to increase efficiency in manufacturing.

(b)	Restructuring expense in SG&A was $7.2 million due to projects to increase efficiency in engineering and administrative functions.

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

 

10

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Harman International Industries, Incorporated

Reconciliation of GAAP to Non-GAAP Results

 

		Twelve Months Ended June 30, 2011
(In thousands, except earnings per share data; unaudited)		GAAP				Adjustments				Non-GAAP
Net sales		$	3,772,345			$	0			$	3,772,345
Cost of sales			2,784,995				(4,108	)a			2,780,887
Gross profit			987,350				4,108				991,458
Selling, general and administrative expenses			813,809				(16,540	)b			797,269
Loss on deconsolidation of variable interest entity			0				0				0
Sale of Intellectual Property			(16,510	)			0				(16,510	)
Goodwill impairment			0				0				0
Operating income			190,051				20,648				210,699
Other expenses:
Interest expense, net			22,576				0				22,576
Miscellaneous, net			7,255				0				7,255
Income from continuing operations before taxes			160,220				20,648				180,868
Income tax expense			24,304				7,506	c			31,810
Income from continuing operations net of taxes			135,916				13,142				149,058
Less: Net income attributable to non-controlling interest			0				0				0
Net income from continuing operations attributable to Harman International Industries, Incorporated		$	135,916			$	13,142			$	149,058
Earnings per share from continuing operations attributable to Harman International Industries, Incorporated:
Basic		$	1.91			$	0.19			$	2.10
Diluted		$	1.90			$	0.18			$	2.08
Weighted average shares outstanding:
Basic			70,992								70,992
Diluted			71,635								71,635

 

(a)	Restructuring expense in Cost of Sales was $4.1 million due to projects to increase efficiency in manufacturing.

(b)	Restructuring expense in SG&A was $16.5 million due to projects to increase efficiency in engineering and administrative functions.

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

Reconciliation of GAAP to Non-GAAP Results

 

		Three Months Ended June 30, 2010
(In thousands, except earnings per share data; unaudited)		GAAP				Adjustments				Non-GAAP
Net sales		$	850,716			$	0			$	850,716
Cost of sales			627,052				(118	)a			626,934
Gross profit			223,664				118				223,782
Selling, general and administrative expenses			198,134				(4,063	)b			194,071
Loss on deconsolidation of variable interest entity			0				0				0
Sale of Intellectual Property			0				0				0
Goodwill impairment			0				0				0
Operating income			25,530				4,181				29,711
Other expenses:
Interest expense, net			6,266				0				6,266
Miscellaneous, net			2,542				0				2,542
Income from continuing operations before taxes			16,722				4,181				20,903
Income tax expense			(1,715	)			1,366	c			(349	)
Income from continuing operations net of taxes			18,437				2,815				21,252
Less: Net income attributable to non-controlling interest			0				0				0
Net income from continuing operations attributable to Harman International Industries, Incorporated		$	18,437			$	2,815			$	21,252
Earnings per share from continuing operations attributable to Harman International Industries, Incorporated:
Basic		$	0.26			$	0.04			$	0.30
Diluted		$	0.26			$	0.04			$	0.30
Weighted average shares outstanding:
Basic			70,584								70,584
Diluted			70,927								70,927

 

(a)	Restructuring expense in Cost of Sales was $0.1 million due to projects to increase efficiency in manufacturing.

(b)	Restructuring expense in SG&A was $4.1 million due to projects to increase efficiency in engineering and administrative functions.

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

 

12

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Harman International Industries, Incorporated

Reconciliation of GAAP to Non-GAAP Results

 

		Twelve Months Ended June 30, 2010
(In thousands, except earnings per share data; unaudited)		GAAP				Adjustments				Non-GAAP
Net sales		$	3,364,428			$	0			$	3,364,428
Cost of sales			2,479,270				(4,371	)a			2,474,899
Gross profit			885,158				4,371				889,529
Selling, general and administrative expenses			774,189				(13,503	)b			760,686
Loss on deconsolidation of variable interest entity			13,122				0				13,122
Sale of Intellectual Property			0				0				0
Goodwill impairment			12,292				(12,292	)c			0
Operating income			85,555				30,166				115,721
Other expenses:
Interest expense, net			30,215				0				30,215
Miscellaneous, net			6,263				0				6,263
Income from continuing operations before taxes			49,077				30,166				79,243
Income tax expense			8,610				5,343	d			13,953
Income from continuing operations net of taxes			40,467				24,823				65,290
Less: Net income attributable to non-controlling interest			5,289				0				5,289
Net income from continuing operations attributable to Harman International Industries, Incorporated		$	35,178			$	24,823			$	60,001
Earnings per share from continuing operations attributable to Harman International Industries, Incorporated:
Basic		$	0.50			$	0.35			$	0.85
Diluted		$	0.50			$	0.35			$	0.85
Weighted average shares outstanding:
Basic			70,350								70,350
Diluted			70,595								70,595

 

(a)	Restructuring expense in Cost of Sales was $4.4 million due to projects to increase efficiency in manufacturing.

(b)	Restructuring expense in SG&A was $13.5 million due to projects to increase efficiency in engineering and administrative functions.

(c)	Goodwill impairment charge was $12.3 million.

(d)	The tax benefits are calculated by multiplying the actual restructuring 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.

 

13

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Harman International Industries, Incorporated

Reconciliation of GAAP to Non-GAAP Results

Foreign Currency Translation Impact

 

		Three Months Ended June 30,								Increase (Decrease)
(In thousands; unaudited)		2011				2010
Net sales – nominal currency		$	1,031,122			$	850,716				21	%
Effect of foreign currency translation1							71,707
Net sales - local currency			1,031,122				922,423				12	%
Gross profit – nominal currency			245,214				223,664				10	%
Effect of foreign currency translation1							16,149
Gross profit – local currency			245,214				239,813				2	%
SG&A & Other – nominal currency			219,375				198,134				11	%
Effect of foreign currency translation1							13,714
SG&A & Other – local currency			219,375				211,848				4	%
Operating income – nominal currency			25,839				25,530				1	%
Effect of foreign currency translation1							2,435
Operating income – local currency			25,839				27,965				(8	%)
1         Impact of restating prior year results at current year foreign exchange rates.

Harman International 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 our reported financial results, we show the rates of change both including and excluding the effect of these changes in exchange rates. We encourage readers of our financial statements to evaluate our 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 our consolidated financial statements prepared in accordance with US GAAP.

 

14

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Harman International Industries, Incorporated

Reconciliation of GAAP to Non-GAAP Results

Foreign Currency Translation Impact

 

EXCLUDING restructuring and goodwill charges		Three Months Ended June 30,								Increase (Decrease)
(In thousands; unaudited)		2011				2010
Net sales – nominal currency		$	1,031,122			$	850,716				21	%
Effect of foreign currency translation1							71,707
Net sales – local currency			1,031,122				922,423				12	%
Gross profit - nominal currency			246,950				223,782				10	%
Effect of foreign currency translation1							16,149
Gross profit - local currency			246,950				239,931				3	%
SG&A & Other – nominal currency			212,180				194,071				9	%
Effect of foreign currency translation1							13,760
SG&A & Other – local currency			212,180				207,831				2	%
Operating income – nominal currency			34,770				29,711				17	%
Effect of foreign currency translation1							2,388
Operating income – local currency			34,770				32,099				8	%

 

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

Harman International 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 our reported financial results, we show the rates of change both including and excluding the effect of these changes in exchange rates. We encourage readers of our financial statements to evaluate our 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 our consolidated financial statements prepared in accordance with US GAAP.

 

15

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Harman International Industries, Incorporated

Reconciliation of GAAP to Non-GAAP Results

Foreign Currency Translation Impact

 

		Twelve Months Ended June 30,
(In thousands; unaudited)		2011				2010				Increase (Decrease)
Net sales – nominal currency		$	3,772,345			$	3,364,428				12	%
Effect of foreign currency translation1							(17,373	)
Net sales - local currency			3,772,345				3,347,055				13	%
Gross profit – nominal currency			987,350				885,158				12	%
Effect of foreign currency translation1							(4,276	)
Gross profit – local currency			987,350				880,882				12	%
SG&A & Other – nominal currency			797,299				799,603				0	%
Effect of foreign currency translation1							(8,302	)
SG&A & Other – local currency			797,299				791,301				1	%
Operating income – nominal currency			190,051				85,555				122	%
Effect of foreign currency translation1							4,026
Operating income – local currency			190,051				89,581				112	%
1         Impact of restating prior year results at current year foreign exchange rates.

Harman International 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 our reported financial results, we show the rates of change both including and excluding the effect of these changes in exchange rates. We encourage readers of our financial statements to evaluate our 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 our consolidated financial statements prepared in accordance with US GAAP.

 

16

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Harman International Industries, Incorporated

Reconciliation of GAAP to Non-GAAP Results

Foreign Currency Translation Impact

 

EXCLUDING restructuring and goodwill charges		Twelve Months Ended June 30,
(In thousands; unaudited)		2011				2010				Increase (Decrease)
Net sales – nominal currency		$	3,772,345			$	3,364,428				12	%
Effect of foreign currency translation1							(17,373	)
Net sales – local currency			3,772,345				3,347,055				13	%
Gross profit - nominal currency			991,458				889,529				12	%
Effect of foreign currency translation1							(4,572	)
Gross profit - local currency			991,458				884,957				12	%
SG&A & Other – nominal currency			780,759				773,808				1	%
Effect of foreign currency translation1							(7,780	)
SG&A & Other – local currency			780,759				766,028				2	%
Operating income – nominal currency			210,699				115,721				82	%
Effect of foreign currency translation1							3,208
Operating income – local currency			210,699				118,929				77	%

 

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

Harman International 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 our reported financial results, we show the rates of change both including and excluding the effect of these changes in exchange rates. We encourage readers of our financial statements to evaluate our 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 our consolidated financial statements prepared in accordance with US GAAP.

 

17

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Harman International Industries, Incorporated

Total Liquidity Reconciliation

 

Total Company Liquidity		As of June 30, 2011
$ millions
Cash & cash equivalents		$	604
Short-term investments			317
Available credit under Revolving Credit Facility			543
Total liquidity		$	1,464

 

18