Exhibit 99.1

 

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

HARMAN Reports Second Quarter Fiscal Year 2015 Results

 

•

Net sales increase 19% to $1.6 billion; Up 24% excluding foreign currency translation

 

•

Operational EPS up 64% to $1.79; Operational EBITDA up 43% to $198 million

 

•

Raises fiscal year 2015 operational EPS guidance from $5.25 to $5.85

 

•

Strengthens connected car solutions with acquisitions of Red Bend and S1NN

 

•

Expands to software services including cloud, mobility and analytics with acquisition of Symphony Teleca

STAMFORD, CT, January 29, 2015 – Harman International Industries, Incorporated (NYSE: HAR), the premier audio, visual, infotainment and enterprise automation group, today announced results for the second quarter ended December 31, 2014.

Net sales for the second quarter were $1.58 billion, an increase of 19 percent compared to the same period in the prior year or 24 percent excluding the impact of foreign currency translation. Infotainment net sales increased 12 percent, or 18 percent excluding foreign currency translation (ex-FX), due to platform expansion, stronger automotive production, and higher take rates. Lifestyle net sales grew 26 percent (31 percent ex-FX) driven by strong demand for the Company’s home and multimedia product lines and increased automotive production levels and higher take rates in car audio. Net sales in the Professional division increased 29 percent (32 percent ex-FX) primarily as a result of the expansion of the Company’s product portfolio into enterprise automation and control and video switching.

On a GAAP basis, second quarter operating income was $149 million, compared to $102 million in the same period in the prior year, and earnings per diluted share were $1.65 for the quarter compared to $1.03 in the same period in the prior year. Excluding restructuring and other non-recurring items, second quarter operating income was $162 million compared to $108 million in the same period in the prior year, and earnings per diluted share were $1.79 compared to $1.09 in the same period last year.

“I am extremely pleased to report double-digit, top-line growth in each of HARMAN’s divisions, making this HARMAN’s sixth consecutive quarter of such outstanding performance. Despite foreign exchange headwinds, our fiscal year is off to a solid start with 21 percent year-to-date, top-line growth, driving over 150 basis point expansion of our EBITDA margin. As a result, we are raising our 2015 EPS guidance from $5.25 to $5.85,” said Dinesh C. Paliwal, the Company’s Chairman, President and Chief Executive Officer. “We are confident that the demand for a rich connected car experience is sustainable and will continue to drive take rates, particularly for embedded infotainment systems and branded car audio solutions.

“Together with our progress in Infotainment and Professional, groundbreaking innovations in Lifestyle and on-going focus on disciplined execution, we are optimistic about the second half of fiscal year 2015,” added Paliwal. “Longer term, we have been reinforcing the importance of software and services to HARMAN as the technology leader for the connected lifestyle, including enterprise, home, car and mobile markets. With the transformative acquisitions of Red Bend and Symphony Teleca and expanded capabilities in cloud, mobility and analytics, HARMAN will accelerate Internet of Things solutions for a broader set of industries and markets.”

---

FY 2015 Key Figures – Total Company		Three Months Ended December 31																Six Months Ended December 31
										Increase (Decrease)																Increase (Decrease)
$ millions (except per share data)		3M FY15				3M FY14				Including Currency Changes				Excluding Currency Changes1				6M FY15				6M FY14				Including Currency Changes				Excluding Currency Changes1
Net sales			1,584				1,328				19	%			24	%			3,012				2,500				21	%			23	%
Gross profit			493				379				30	%			35	%			908				701				29	%			32	%
Percent of net sales			31.1	%			28.6	%											30.1	%			28.0	%
SG&A			344				278				24	%			28	%			643				530				21	%			24	%
Operating income			149				102				46	%			52	%			265				171				54	%			59	%
Percent of net sales			9.4	%			7.7	%											8.8	%			6.8	%
EBITDA			186				134				38	%			44	%			339				235				44	%			48	%
Percent of net sales			11.7	%			10.1	%											11.3	%			9.4	%
Net Income attributable to HARMAN International Industries, Incorporated			116				72				62	%			72	%			199				118				69	%			76	%
Diluted earnings per share			1.65				1.03				61	%			71	%			2.84				1.69				68	%			76	%
Restructuring & non-recurring costs			14				6												25				30
Non-GAAP - operational1
Gross profit			479				381				26	%			30	%			896				705				27	%			30	%
Percent of net sales			30.2	%			28.7	%											29.7	%			28.2	%
SG&A			316				273				16	%			20	%			606				503				20	%			23	%
Operating income			162				108				51	%			57	%			290				201				44	%			48	%
Percent of net sales			10.2	%			8.1	%											9.6	%			8.0	%
EBITDA			198				139				43	%			48	%			362				262				38	%			42	%
Percent of net sales			12.5	%			10.5	%											12.0	%			10.5	%
Net Income attributable to HARMAN International Industries, Incorporated			126				76				66	%			75	%			218				143				53	%			59	%
Diluted earnings per share			1.79				1.09				64	%			74	%			3.10				2.04				52	%			58	%
Shares outstanding – diluted (in millions)			70				70												70				70

 

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

Summary of Operations – Gross Margin and SG&A

Non-GAAP gross margin for the second quarter of fiscal 2015 increased 155 basis points to 30.2 percent. The improvement was primarily due to the impact of higher sales volume utilizing a more efficient fixed production cost base and favorable product mix.

In the second quarter of fiscal 2015, SG&A expense as a percentage of net sales decreased 59 basis points to 20.0 percent on a non-GAAP basis primarily due to improved operating leverage on higher sales.

2015 Guidance Update

HARMAN today raised its financial outlook for fiscal 2015. The Company now forecasts operational EBITDA and operational earnings per share of $715 million and $5.85, respectively, based on: a Euro/USD weighted average rate of 1.22 (1.15 for the second half of fiscal year 2015); an effective tax rate of 24 percent for the full year; and approximately 70.5 million shares outstanding for the full year. The Company expects closing of the recently announced acquisitions of Red Bend and Symphony Teleca to occur in the fourth quarter of fiscal 2015. The impact of these transactions is not included in the revised guidance.

January 29, 2015 Guidance Updated

 

Fiscal Year 2015		HARMAN
Revenue		~$6.0 billion
EBITDA*		~$715 million
EPS*		~$5.85
Share Count ~70.5 M        Tax Rate 24%        Euro/USD: 1.22        Interest and Misc: ~$23M

August 7th, 2014 Guidance

 

Fiscal Year 2015		HARMAN
Revenue		~$6.0 billion
EBITDA*		~$685 million
EPS*		~$5.25
Share Count ~71 M        Tax Rate ~26%        Euro/USD: 1.35        Interest and Misc: ~$27M

 

*	NON-GAAP, EXCLUDING RESTRUCTURING AND NON-RECURRING ITEMS

---

Investor Call Today January 29, 2015

At 11:00 a.m. EDT today, HARMAN’s management will host an analyst and investor conference call to discuss the second quarter results. Those who want to participate via audio in the earnings conference call should dial 1 (800) 913 8744 (U.S.) or +1 (212) 231 2928 (International) ten minutes before the call and reference HARMAN, Access Code: 21759148.

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 second 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 Thursday, April 30th, 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: 21759148. 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 (www.harman.com) designs, manufactures and markets premier audio, visual, infotainment and enterprise automation solutions for the automotive, consumer and professional markets. With leading brands including AKG^®, Harman Kardon^®, Infinity^®, JBL^®, Lexicon^® , Mark Levinson ^® and Revel^®, the Company is admired by audiophiles, musicians and the entertainment venues where they perform. More than 25 million automobiles on the road today are equipped with HARMAN audio and infotainment systems. HARMAN has a workforce of approximately 17,600 people across the Americas, Europe, and Asia and reported sales of $5.9 billion during the last 12 months ended December 31, 2014.

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 Company’s ability to maintain a competitive technological advantage through innovation and leading product designs; (8) the Company’s failure to maintain the value of its brands and implementing a sufficient brand protection program; and (9) other risks detailed in 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 our 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.

---

APPENDIX

Infotainment Division

 

FY 2015 Key Figures – Infotainment		Three Months Ended December 31																Six Months Ended December 31
										Increase (Decrease)																Increase (Decrease)
$ millions (except per share data)		3M FY15				3M FY14				Including Currency Changes				Excluding Currency Changes1				6M FY15				6M FY14				Including Currency Changes				Excluding Currency Changes1
Net sales			774				691				12	%			18	%			1,522				1,330				14	%			17	%
Gross profit			196				165				19	%			24	%			372				307				21	%			25	%
Percent of net sales			25.3	%			23.9	%											24.5	%			23.0	%
SG&A			106				102				4	%			9	%			205				211				(3	%)			(0	%)
Operating income			90				63				43	%			48	%			167				95				76	%			80	%
Percent of net sales			11.6	%			9.1	%											11.0	%			7.1	%
EBITDA			108				79				36	%			42	%			202				127				59	%			63	%
Percent of net sales			13.9	%			11.4	%											13.3	%			9.6	%
Restructuring & non-recurring costs			3				(1	)											5				21
Non-GAAP - operational1
Gross profit			197				167				18	%			24	%			375				309				21	%			24	%
Percent of net sales			25.5	%			24.1	%											24.6	%			23.2	%
SG&A			104				105				(1	%)			4	%			203				194				5	%			8	%
Operating income			93				61				52	%			57	%			172				116				49	%			52	%
Percent of net sales			12.0	%			8.9	%											11.3	%			8.7	%
EBITDA			110				76				44	%			49	%			204				145				40	%			44	%
Percent of net sales			14.1	%			11.0	%											13.4	%			10.9	%

 

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

Net sales in the second quarter of fiscal 2015 were $774 million, an increase of 12 percent compared to the same period in the prior year or 18 percent excluding the impact of foreign currency translation. The increases in net sales were due to the expansion of recently launched platforms, stronger automotive production and higher take rates, partially offset by unfavorable foreign currency translation.

On a non-GAAP basis in the second quarter of fiscal 2015, gross margin increased 137 basis points to 25.5 percent compared to the same period in 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 181 basis points to 13.4 percent primarily due to improved operating leverage on higher sales.

Infotainment Division Highlights

During the quarter, HARMAN continued to position itself for long-term growth in the emerging markets. In India, HARMAN secured new business with TATA Motors, and in recognition of its strategic contribution to the recently launched ConnectNext connectivity platform, HARMAN was awarded the TATA Technology Supplier of the Year award. HARMAN also opened its first manufacturing plant in Pune, India to deliver cutting-edge infotainment and audio solutions for regional automakers.

HARMAN gained new business awards with Guangzhou Automotive Group/Chrysler/FIAT (GAC/FIAT), Jaguar Land Rover and Toyota. In addition, HARMAN announced a strategic collaboration with Baidu, the most popular search engine and mobile map provider in China. HARMAN will seamlessly integrate Baidu’s new CarLife networking solution into HARMAN’s infotainment head units. HARMAN and Baidu will bring a tailored in-vehicle user experience and personalized content to the Chinese market, offering advanced internet capabilities, entertainment features and location-based services, resulting in a richer and more immersive connected car experience.

At CES 2015, HARMAN introduced several breakthrough technologies. HARMAN unveiled the newest evolution of its scalable infotainment platform. Designed for entry- and mid-level vehicles, the solution offers flexible smartphone connectivity, including Apple CarPlay and Android Auto along with on-board navigation options, integrated audio support, and robust cyber security. The Company also launched the industry’s first connected navigation solution based on the Navigation Data Standard (NDS) that incrementally updates map data in the field. This over-the-air (OTA) update capability ensures map data is always up-to-date and is delivered seamlessly to cars on the road. BMW is the first automaker to deploy the solution across the HARMAN-developed NBT infotainment platform.

During the quarter, HARMAN announced it plans to acquire Stuttgart-based S1nn GmbH, an innovative developer of infotainment systems, connectivity, and car audio solutions with strong HTML5 based capabilities. S1nn customers include Volkswagen, Porsche, Audi and Tesla Motors.

---

Lifestyle Division

 

FY 2015 Key Figures – Lifestyle		Three Months Ended December 31																Six Months Ended December 31
										Increase (Decrease)																Increase (Decrease)
$ millions (except per share data)		3M FY15				3M FY14				Including Currency Changes				Excluding Currency Changes1				6M FY15				6M FY14				Including Currency Changes				Excluding Currency Changes1
Net sales			541				430				26	%			31	%			967				764				27	%			29	%
Gross profit			185				136				35	%			40	%			319				243				31	%			34	%
Percent of net sales			34.1	%			31.7	%											33.0	%			31.8	%
SG&A			128				85				50	%			54	%			213				151				41	%			43	%
Operating income			57				51				11	%			16	%			107				92				15	%			19	%
Percent of net sales			10.5	%			11.9	%											11.0	%			12.1	%
EBITDA			66				59				12	%			16	%			126				109				15	%			18	%
Percent of net sales			12.2	%			13.8	%											13.0	%			14.2	%
Restructuring & non-recurring costs			12				4												16				6
Non-GAAP - operational1
Gross profit			172				136				26	%			31	%			308				243				27	%			29	%
Percent of net sales			31.8	%			31.6	%											31.9	%			31.9	%
SG&A			103				81				28	%			32	%			186				145				28	%			30	%
Operating income			69				55				25	%			29	%			122				98				25	%			28	%
Percent of net sales			12.7	%			12.9	%											12.7	%			12.8	%
EBITDA			78				63				24	%			28	%			141				114				24	%			27	%
Percent of net sales			14.5	%			14.8	%											14.6	%			14.9	%

 

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

Net sales in the second quarter of fiscal 2015 were $541 million, an increase of 26 percent compared to the same period in the prior year, or 31 percent excluding the impact of foreign currency translation. The growth in home and multimedia was primarily due to recent product introductions and the continued expansion of global distribution channels. The growth in car audio was primarily driven by higher take rates, stronger automotive production and expansion of recently launched programs.

On a non-GAAP basis in the second quarter of fiscal 2015, gross margin improved by 15 basis points to 31.8 percent compared to the prior year. SG&A expenses as a percentage of sales increased by 29 basis points to 19.1 percent, due to continued investments in marketing.

Lifestyle Division Highlights

During the quarter, HARMAN secured new car audio awards from Great Wall Motors, Lexus, and Ferrari. HARMAN also secured an award for hands-free microphones from Porsche. The Company launched new car audio systems in the new Mercedes GLA, and BMW M4 Cabrio and the 2Series Sports Tourer. HARMAN’s Clari-Fi™ audio restoration technology is also an integral feature in new vehicle launches by Hyundai and Lexus.

HARMAN also introduced new technology that creates independent sound zones within the car. Demonstrated at CES 2015, this new technology combines innovative acoustic design and complementary digital signal processing to create a more comfortable and enjoyable in-cabin experience. Each passenger can activate and control their zone, so for example, phone calls can remain private and music playback can be limited to each passenger’s seat. At CES, HARMAN also demonstrated its HALOsonic suite of noise management solutions, including Engine Order Cancellation (EOC), Engine Sound Synthesis (ESS) and Road Noise Cancellation (RNC). These technologies have received high industry praise, including the prestigious SAE 2014 Environmental Excellence in Transportation award for HALOsonic.

HARMAN’s home and multimedia products were recognized during the quarter with several industry accolades. The Company received nine CES Innovation awards, and seven products were named “Best Product Sound of CES” and “Best Wireless Headphones of CES” by publications such as CNET and Europe’s Computerbild.

The Harman Kardon Wireless HD audio system was successfully launched in Europe, China and the US, bringing HD audio to end consumers through its multi-room streaming capabilities. Unlike other wireless streaming systems, the Harman Kardon Omni home system supports 24-bit/96kHz studio quality HD audio streaming, offering a superior audio experience with higher resolution than from a CD.

Building on the emerging interest for high definition audio solutions, HARMAN announced a strategic partnership with Pono Music, led by music icon Neil Young. The two companies are collaborating to bring high definition audio into the car.

---

Professional Division

 

FY 2015 Key Figures – Professional		Three Months Ended December 31																Six Months Ended December 31
										Increase (Decrease)																Increase (Decrease)
$ millions (except per share data)		3M FY15				3M FY14				Including Currency Changes				Excluding Currency Changes1				6M FY15				6M FY14				Including Currency Changes				Excluding Currency Changes1
Net sales			267				207				29	%			32	%			522				405				29	%			30	%
Gross profit			111				78				43	%			47	%			215				151				42	%			44	%
Percent of net sales			41.7	%			37.4	%											41.2	%			37.3	%
SG&A			76				52				45	%			49	%			156				99				57	%			59	%
Operating income			36				25				41	%			43	%			59				52				14	%			14	%
Percent of net sales			13.4	%			12.2	%											11.3	%			12.8	%
EBITDA			43				31				41	%			43	%			76				62				22	%			23	%
Percent of net sales			16.2	%			14.9	%											14.5	%			15.3	%
Restructuring & non-recurring costs			(3	)			2												2				2
Non-GAAP - operational1
Gross profit			108				78				38	%			41	%			212				152				40	%			41	%
Percent of net sales			40.4	%			37.7	%											40.5	%			37.4	%
SG&A			75				51				47	%			51	%			150				98				54	%			56	%
Operating income			33				27				23	%			24	%			61				54				14	%			14	%
Percent of net sales			12.4	%			13.0	%											11.8	%			13.3	%
EBITDA			41				32				26	%			28	%			78				64				22	%			23	%
Percent of net sales			15.2	%			15.6	%											14.9	%			15.7	%

 

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

Net sales in the second quarter of fiscal 2015 were $267 million, an increase of 29 percent compared to the same period in the prior year, or 32 percent excluding foreign currency impact. The increase in net sales is primarily due to the expansion of the Company’s product portfolio into enterprise automation and video switching, as a result of the acquisition of AMX.

On a non-GAAP basis in the second quarter of fiscal 2015, gross margin increased 277 basis points to 40.4 percent and SG&A expense as a percentage of sales increased to 28 percent compared to 24.6 percent in the prior year. Both of these increases are primarily due to the expansion of the Company’s product portfolio into enterprise automation and video switching.

Professional Division Highlights

During the second 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 include AON headquarters in London, São Paulo Airport, Marine Corp University, the Las Vegas MGM hotel, and Carnival cruise ships. HARMAN’s products also powered a wide range of televised award shows, high-profile special events, and music festivals and tours.

HARMAN’s professional products will also be featured at several major upcoming events, including the GRAMMY™ Awards, the 48^th Annual Super Bowl Halftime Show, and the NBA All-Star Game Concert.

The Company launched 23 new products during the quarter. Several products were honored with innovation awards from industry experts including Crown’s DCi Series amplifiers, JBL’s LSR 305 Studio Monitors and AMX Enova video switchers.

---

Other (Corporate)

 

FY 2015 Key Figures – Other		Three Months Ended December 31																Six Months Ended December 31
										Increase (Decrease)																Increase (Decrease)
$ millions (except per share data)		3M FY15				3M FY14				Including Currency Changes				Excluding Currency Changes1				6M FY15				6M FY14				Including Currency Changes				Excluding Currency Changes1
SG&A			35				38				(7	%)			(7	%)			70				68				2	%			2	%
Restructuring & non-recurring costs			1				2												3				2
Non-GAAP - operational1
SG&A			34				36				(5	%)			(4	%)			67				67				0	%			1	%

 

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. On a non-GAAP basis in the second quarter of fiscal 2015, SG&A expense as a percentage of the Company’s net sales decreased by 55 basis points compared to the same period in the prior year to 2.2 percent.

Recently, the Company announced that it had entered into agreements to acquire two companies in the software services and technology segments. Israeli-based Red Bend Ltd is a leading provider of Over-the-Air update and hypervisor-based software for cyber security applications. Symphony Teleca, based in Mountain View, CA, is a global software services company providing software engineering and integration services. Together, Symphony Teleca, Red Bend and HARMAN are poised to become the global technology partners of choice for all markets – a comprehensive products, systems and engineering services company, leveraging mobility, analytics, and cloud competencies, with a mission to enable, enhance, and leverage the connected lifestyle.

---

HARMAN International Industries, Incorporated

Consolidated Statements of Income

 

(In thousands, except earnings per share data; unaudited)		Three Months Ended December 31,								Six Months Ended December 31,
		2014				2013				2014				2013
Net sales		$	1,583,549			$	1,328,024			$	3,012,471			$	2,499,829
Cost of sales			1,090,383				948,574				2,104,673				1,798,730
Gross profit			493,166				379,450				907,798				701,099
Selling, general and administrative expenses			344,409				277,594				643,258				529,861
Operating income			148,757				101,856				264,540				171,238
Other expenses:
Interest expense, net			2,183				1,855				4,860				3,825
Foreign exchange losses (gains), net			(1,020	)			3,110				(960	)			3,971
Miscellaneous, net			2,298				1,792				4,638				3,121
Income before income taxes			145,296				95,099				256,002				160,321
Income tax expense, net			29,132				23,470				56,904				42,146
Equity in net loss of unconsolidated subsidiaries			0				0				0				94
Net income			116,164				71,629				199,098				118,081
Net income attributable to non-controlling interest			(71	)			0				(110	)			0
Net income attributable to HARMAN International Industries, Incorporated		$	116,235			$	71,629			$	199,208			$	118,081
Earnings per share:
Basic		$	1.67			$	1.04			$	2.87			$	1.71
Diluted		$	1.65			$	1.03			$	2.84			$	1.69
Weighted average shares outstanding:
Basic			69,432				68,715				69,367				69,131
Diluted			70,258				69,578				70,202				69,947

---

HARMAN International Industries, Incorporated

Consolidated Balance Sheets

 

(In thousands; unaudited)		December 31, 2014				June 30, 2014
ASSETS
Current Assets
Cash and cash equivalents		$	510,262			$	581,312
Receivables, net			908,157				894,579
Inventories			724,201				662,128
Other current Assets			381,400				320,852
Total current assets			2,524,020				2,458,871
Property, plant and equipment, net			475,238				509,856
Goodwill			530,889				540,952
Deferred tax assets, long-term, net			107,160				170,558
Other assets			540,347				445,353
Total assets		$	4,177,654			$	4,125,590
LIABILITIES AND EQUITY
Current liabilities
Current portion of long-term debt		$	39,375			$	35,625
Short-term debt			1,929				3,736
Accounts payable			789,921				697,552
Accrued liabilities			544,943				566,722
Accrued warranties			163,304				155,472
Income taxes payable			22,306				26,544
Total current liabilities			1,561,778				1,485,652
Borrowings under revolving credit facility			175,000				300,000
Long-term debt			198,777				219,407
Pension liability			176,617				186,352
Other non-current liabilities			114,548				141,158
Total liabilities			2,226,720				2,332,569
Total HARMAN International Industries, Incorporated shareholders’ equity			1,950,601				1,792,578
Noncontrolling interest			333				443
Total equity			1,950,934				1,793,021
Total liabilities and equity		$	4,177,654			$	4,125,590

---

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 December 31, 2014
		GAAP				Adjustments				Non-GAAP – Operational
Net sales		$	1,583,549			$	0			$	1,583,549
Cost of sales			1,090,383				14,536	a			1,104,919
Gross profit			493,166				(14,536	)			478,630
Selling, general and administrative expenses			344,409				(28,082	)b			316,327
Operating income			148,757				13,546				162,303
Other expenses:
Interest expense, net			2,183				0				2,183
Foreign exchange losses, net			(1,020	)			0				(1,020	)
Miscellaneous, net			2,298				(0	)			2,298
Income before income taxes			145,296				13,546				158,842
Income tax expense, net			29,132				3,743	c			32,875
Net income			116,164				9,803				125,967
Net income attributable to non-controlling interest			(71	)			0				(71	)
Net income attributable to HARMAN International Industries, Incorporated		$	116,235			$	9,803			$	126,038
Earnings per share:
Basic		$	1.67			$	0.14			$	1.82
Diluted		$	1.65			$	0.14			$	1.79
Weighted average shares outstanding:
Basic			69,432								69,432
Diluted			70,258								70,258

 

a)	Restructuring expense in Cost of Sales was $1.4 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 $23.7 million primarily due to projects to increase productivity in engineering, manufacturing and administrative functions; other non-recurring expense included in SG&A was $4.4 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.

---

HARMAN International Industries, Incorporated

Consolidated Statement of Income

Reconciliation of GAAP to Non-GAAP Results

 

(In thousands except earnings per share data; unaudited)		Six Months Ended December 31, 2014
		GAAP				Adjustments				Non-GAAP – Operational
Net sales		$	3,012,471			$	0			$	3,012,471
Cost of sales			2,104,673				11,614	a			2,116,287
Gross profit			907,798				(11,614	)			896,184
Selling, general and administrative expenses			643,258				(36,967	)b			606,291
Operating income			264,540				25,353				289,893
Other expenses:
Interest expense, net			4,860				0				4,860
Foreign exchange losses, net			(960	)			0				(960	)
Miscellaneous, net			4,638				0				4,638
Income before income taxes			256,002				25,353				281,355
Income tax expense, net			56,904				6,629	c			63,533
Equity in net loss of unconsolidated subsidiaries			0				0				0
Net income			199,098				18,724				217,822
Net income attributable to non-controlling interest			(110	)			0				(110	)
Net income attributable to HARMAN International Industries, Incorporated		$	199,208			$	18,724			$	217,932
Earnings per share:
Basic		$	2.87			$	0.27			$	3.14
Diluted		$	2.84			$	0.27			$	3.10
Weighted average shares outstanding:
Basic			69,367								69,367
Diluted			70,202								70,202

 

a)	Restructuring expense in Cost of Sales was $4.3 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 $27.7 million primarily due to projects to increase productivity in engineering and administrative functions. Other non-recurring expense includes in SG&A was $9.3M 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.

---

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 December 31, 2013
		GAAP				Adjustments				Non-GAAP – Operational
Net sales		$	1,328,024			$	0			$	1,328,024
Cost of sales			948,574				(1,384	)a			947,190
Gross profit			379,450				1,384				380,834
Selling, general and administrative expenses			277,594				(4,469	)b			273,125
Operating income			101,856				5,853				107,709
Other expenses:
Interest expense, net			1,855				0				1,855
Foreign exchange losses, net			3,110				0				3,110
Miscellaneous, net			1,792				0				1,792
Income before income taxes			95,099				5,853				100,952
Income tax expense, net			23,470				1,529	c			24,999
Net income			71,629				4,324				75,953
Net income attributable to non-controlling interest			0				0				0
Net income attributable to HARMAN International Industries, Incorporated		$	71,629			$	4,324			$	75,953
Earnings per share:
Basic		$	1.04			$	0.06			$	1.11
Diluted		$	1.03			$	0.06			$	1.09
Weighted average shares outstanding:
Basic			68,715								68,715
Diluted			69,578								69,578

 

a)	Restructuring expense in Cost of sales was $2.0 million for projects to increase manufacturing productivity. Other non-recurring expense included in Cost of sales was income of $0.6 million.

d)	Restructuring expense in SG&A was $2.9 million primarily due to projects to increase productivity in engineering and administrative functions. Other non-recurring expense included in SG&A was $1.5 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.

---

HARMAN International Industries, Incorporated

Consolidated Statement of Income

Reconciliation of GAAP to Non-GAAP Results

 

(In thousands except earnings per share data; unaudited)		Six Months Ended December 31, 2013
		GAAP				Adjustments				Non-GAAP – Operational
Net sales		$	2,499,829			$	0			$	2,499,829
Cost of sales			1,798,730				(3,433	)a			1,795,297
Gross profit			701,099				3,433				704,532
Selling, general and administrative expenses			529,861				(26,455	)b			503,406
Operating income			171,238				29,888				201,126
Other expenses:
Interest expense, net			3,825				0				3,825
Foreign exchange losses, net			3,971				0				3,971
Miscellaneous, net			3,121				0				3,121
Income before income taxes			160,321				29,888				190,209
Income tax expense, net			42,146				5,150	c			47,296
Equity in net loss of unconsolidated subsidiaries			94				0				94
Net income			118,081				24,738				142,819
Net income attributable to non-controlling interest			0				0				0
Net income attributable to HARMAN International Industries, Incorporated		$	118,081			$	24,738			$	142,819
Earnings per share:
Basic		$	1.71			$	0.36			$	2.07
Diluted		$	1.69			$	0.35			$	2.04
Weighted average shares outstanding:
Basic			69,131								69,131
Diluted			69,947								69,947

 

a)	Restructuring expense in Cost of Sales was $4.0 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 $24.9 million primarily due to projects to increase productivity in engineering and administrative functions; other non-recurring expense in SG&A was 1.5 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.

---

HARMAN International Industries, Incorporated

Selected Financial Data

Reconciliation of GAAP to Non-GAAP Results

Foreign Currency Translation Impact

 

(In thousands; unaudited)		Three Months Ended December 31,								Increase / (Decrease)
		2014				2013
Net sales - nominal currency		$	1,583,549			$	1,328,024				19	%
Effects of foreign currency translation (1)							(53,700	)
Net sales - local currency			1,583,549				1,274,324				24	%
Gross profit - nominal currency			493,166				379,450				30	%
Effects of foreign currency translation (1)							(13,573	)
Gross profit - local currency			493,166				365,877				35	%
SG&A - nominal currency			344,409				277,594				24	%
Effects of foreign currency translation (1)							(9,280	)
SG&A - local currency			344,409				268,314				28	%
Operating income - nominal currency			148,757				101,856				46	%
Effects of foreign currency translation (1)							(4,292	)
Operating income - local currency			148,757				97,564				52	%
Net income attributable to HARMAN International Industries, Incorporated - nominal currency			116,235				71,629				62	%
Effects of foreign currency translation (1)							(4,211	)
Net income attributable to HARMAN International Industries, Incorporated - local currency			116,235				67,418				72	%

 

(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.

---

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 December 31,								Increase / (Decrease)
		2014				2013
Net sales - nominal currency		$	1,583,549			$	1,328,024				19	%
Effects of foreign currency translation (1)							(53,700	)
Net sales - local currency			1,583,549				1,274,324				24	%
Gross profit - nominal currency			478,630				380,834				26	%
Effects of foreign currency translation (1)							(13,713	)
Gross profit - local currency			478,630				367,121				30	%
SG&A - nominal currency			316,327				273,125				16	%
Effects of foreign currency translation (1)							(9,574	)
SG&A - local currency			316,327				263,551				20	%
Operating income - nominal currency			162,303				107,709				51	%
Effects of foreign currency translation (1)							(4,139	)
Operating income - local currency			162,303				103,570				57	%
Net income attributable to HARMAN International Industries, Incorporated - nominal currency			126,038				75,953				66	%
Effects of foreign currency translation (1)							(4,058	)
Net income attributable to HARMAN International Industries, Incorporated - local currency			126,038				71,895				75	%

 

(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.

---

HARMAN International Industries, Incorporated

Selected Financial Data

Reconciliation of GAAP to Non-GAAP Results

Foreign Currency Translation Impact

 

(In thousands; unaudited)		Six Months Ended December 31,								Increase / (Decrease)
		2014				2013
Net sales - nominal currency		$	3,012,471			$	2,499,829				21	%
Effects of foreign currency translation (1)							(54,376	)
Net sales - local currency			3,012,471				2,445,453				23	%
Gross profit - nominal currency			907,798				701,099				29	%
Effects of foreign currency translation (1)							(14,304	)
Gross profit - local currency			907,798				686,795				32	%
SG&A - nominal currency			643,258				529,861				21	%
Effects of foreign currency translation (1)							(9,390	)
SG&A - local currency			643,258				520,471				24	%
Operating income - nominal currency			264,540				171,238				54	%
Effects of foreign currency translation (1)							(4,914	)
Operating income - local currency			264,540				166,324				59	%
Net income attributable to HARMAN International Industries, Incorporated - nominal currency			199,208				118,081				69	%
Effects of foreign currency translation (1)							(5,001	)
Net income attributable to HARMAN International Industries, Incorporated - local currency			199,208				113,080				76	%

 

(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.

---

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)		Six Months Ended December 31,								Increase / (Decrease)
		2014				2013
Net sales - nominal currency		$	3,012,471			$	2,499,829				21	%
Effects of foreign currency translation (1)							(54,376	)
Net sales - local currency			3,012,471				2,445,453				23	%
Gross profit - nominal currency			896,184				704,532				27	%
Effects of foreign currency translation (1)							(14,402	)
Gross profit - local currency			896,184				690,130				30	%
SG&A - nominal currency			606,291				503,406				20	%
Effects of foreign currency translation (1)							(8,967	)
SG&A - local currency			606,291				494,439				23	%
Operating income - nominal currency			289,893				201,126				44	%
Effects of foreign currency translation (1)							(5,436	)
Operating income - local currency			289,893				195,690				48	%
Net income attributable to HARMAN International Industries, Incorporated - nominal currency			217,932				142,819				53	%
Effects of foreign currency translation (1)							(5,522	)
Net income attributable to HARMAN International Industries, Incorporated - local currency			217,932				137,297				59	%

 

(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.

---

Harman International Industries, Incorporated

Reconciliation of GAAP to Non-GAAP Results

 

(In thousands, except earnings per share data; unaudited)		Three Months Ended December 31, 2014												Three Months Ended December 31, 2013
		GAAP				Adjustments				Non-GAAP - Operational				GAAP				Adjustments				Non-GAAP - Operational
HARMAN:
Operating income			148,757				13,546				162,303				101,856				5,853				107,709
Depreciation & Amortization			37,120				(1,391	)			35,729				32,526				(1,435	)			31,091
EBITDA			185,877				12,155				198,032				134,382				4,418				138,800
INFOTAINMENT:
Operating income			89,873				3,307				93,180				62,691				(1,497	)			61,194
Depreciation & Amortization			17,642				(1,292	)			16,350				16,198				(1,386	)			14,812
EBITDA			107,515				2,015				109,530				78,889				(2,883	)			76,006
LIFESTYLE
Operating income			56,611				12,276				68,887				51,103				4,205				55,308
Depreciation & Amortization			9,568				(56	)			9,512				8,162				0				8,162
EBITDA			66,179				12,220				78,399				59,265				4,205				63,470
PROFESSIONAL
Operating income			35,820				(2,600	)			33,220				25,404				1,620				27,024
Depreciation & Amortization			7,580				(44	)			7,536				5,407				(49	)			5,358
EBITDA			43,400				(2,644	)			40,756				30,811				1,571				32,382

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.

---

Harman International Industries, Incorporated

Reconciliation of GAAP to Non-GAAP Results

 

(In thousands, except earnings per share data; unaudited)		Six Months Ended December 31, 2014												Six Months Ended December 31, 2013
		GAAP				Adjustments				Non-GAAP - Operational				GAAP				Adjustments				Non-GAAP - Operational
HARMAN:
Operating income			264,540				25,353				289,893				171,238				29,888				201,126
Depreciation & Amortization			74,547				(2,785	)			71,762				64,239				(3,454	)			60,785
EBITDA			339,087				22,568				361,655				235,477				26,434				261,911
INFOTAINMENT:
Operating income			167,226				4,685				171,911				95,118				20,585				115,703
Depreciation & Amortization			34,680				(2,663	)			32,017				32,240				(2,736	)			29,504
EBITDA			201,906				2,022				203,928				127,358				17,849				145,207
LIFESTYLE
Operating income			106,577				15,794				122,371				92,343				5,709				98,052
Depreciation & Amortization			18,946				(56	)			18,890				16,456				(621	)			15,835
EBITDA			125,523				15,738				141,261				108,799				5,088				113,887
PROFESSIONAL
Operating income			59,085				2,251				61,336				51,884				2,070				53,954
Depreciation & Amortization			16,521				(67	)			16,454				9,916				(97	)			9,819
EBITDA			75,606				2,184				77,790				61,800				1,973				63,773

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.

---

HARMAN International Industries, Incorporated

Total Liquidity Reconciliation

 

Total Company Liquidity		December 31, 2014
$ millions
Cash & cash equivalents		$	510
Available credit under Revolving Credit Facility			570
Total Liquidity		$	1,080