Harman International Industries Inc./DE/ : HARMAN Third Quarter Fiscal Year 2012 Sales Up 16%; Operating Income Up 12%
04/30/2012| 08:15am US/Eastern
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Tenth consecutive quarter of year-over-year improvement; all
divisions post higher sales
Largest ever $2 Billion infotainment order from a leading automaker
Largest ever $500M orders for infotainment and audio with Chinese
and Indian automakers
Release of a deferred tax asset valuation allowance increases EPS
by $1.71 to $2.38
Harman International Industries, Incorporated, the leading global audio
and infotainment group (NYSE: HAR), today announced results for the
third quarter ended March 31, 2012.
Net sales for the third quarter were $1,096 million, an increase of 16
percent compared to the same period last year. In local currency, net
sales increased by 19 percent. Third quarter operating income was $60
million, compared to $54 million in the same period last year. Excluding
restructuring charges, operating profit in the third quarter grew by 7
percent to $67 million, compared to $63 million in the same period last
year. On a GAAP basis, earnings per diluted share were $2.38 for the
quarter compared to $0.51 in the same period last year. Excluding the
deferred tax asset valuation calculation, earnings per diluted share
would have been $0.67. Excluding restructuring charges and the benefit
from a tax asset valuation allowance release, compared to $0.60 in the
same period last year, non-GAAP earnings per diluted share were $0.74
for the quarter.
Excluding the one-time gain from the sale of intellectual property in
the same period last year, operating margin during the quarter improved
by 120 basis points on a non-GAAP basis. Last year's EPS of $0.60
included a one-time benefit of $0.17 from the sale of intellectual
property.
"Our relentless focus on innovation and execution has earned us ten
straight quarters of profitable growth," said Dinesh C. Paliwal, the
Company's Chairman, President and CEO. "The luxury car segment we serve
has been highly resilient and has outpaced the overall automotive
market, and we continue to gain market share. Due to our technology
leadership and our strong innovation pipeline, a leading automaker has
selected Harman for an infotainment award worth more than $2 billion. It
is the largest award ever for Harman. Our successful expansion into the
mid-segment with our scalable platform has captured additional growth
opportunities. To expand our market, we have invested smartly in
high-growth BRIC countries, setting up five new manufacturing and
engineering centers. With five hundred million dollars of new orders in
India and China, we are on track to more than double our BRIC sales in
three years and achieve our $1.5 billion sales target by 2015."
FY 2012 Key Figures - Total Company
Three Months Ended March 31
Nine Months Ended March 31
Increase
(Decrease)
Increase
(Decrease)
$ millions (except per share data)
3M
FY12
3M
FY11
Including
Currency
Changes
Excluding
Currency
Changes2
9M
FY12
9M
FY11
Including
Currency
Changes
Excluding
Currency
Changes2
Net sales
1,096
948
16
%
19
%
3,273
2,741
19
%
19
%
Gross profit
293
249
18
%
20
%
886
742
19
%
19
%
Percent of net sales
26.7
%
26.2
%
27.1
%
27.1
%
SG&A & Other
233
195
20
%
22
%
656
578
14
%
13
%
Operating income
60
54
12
%
16
%
229
164
40
%
40
%
Percent of net sales
5.5
%
5.7
%
7.0
%
6.0
%
Net Income
173
37
n.m.%
n.m.%
280
117
140
%
140
%
Diluted earnings per share
2.38
0.51
3.88
1.64
Restructuring-related costs
8
10
10
12
Non-GAAP1
Gross profit
293
250
17
%
20
%
888
745
19
%
19
%
Percent of net sales
26.8
%
26.4
%
27.1
%
27.2
%
SG&A & Other
226
187
21
%
23
%
649
569
14
%
13
%
Operating income
67
63
7
%
11
%
240
176
36
%
37
%
Percent of net sales
6.1
%
6.7
%
7.3
%
6.4
%
Net Income
53
43
23
%
29
%
163
125
31
%
31
%
Diluted earnings per share
0.74
0.60
2.26
1.75
Shares outstanding - diluted (in millions)
73
72
72
72
1,2 A non-GAAP measure, see reconciliations of non-GAAP measures
later in this release. n.m. = not meaningful
Summary of Operations - Gross Margin and SG&A
Gross margin on a non-GAAP basis increased 40 basis points to 26.8
percent in the third quarter of fiscal 2012. The increase was due to
better leverage of fixed costs on higher sales and productivity
improvements in the cost base.
SG&A and Other expense as a percentage of sales on a non-GAAP basis in
the third quarter of fiscal 2012 increased 90 basis points to 20.6
percent. Excluding the one-time gain from the sale of intellectual
property in the same period last year, the SG&A and Other expense was
reduced by 80 basis points.
Investor Call on Monday, April 30, 2012
At 11:00 a.m. EDT on Monday, April 30, 2012, HARMAN's management will
host an analyst and investor conference call to discuss the third
quarter results. Those who wish to participate via audio in the earnings
conference call should dial 1 (800) 732 6870 (U.S.) or +1 212 231 2902
(International) ten minutes before the call and reference HARMAN, Access
Code: 21588697.
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. For your reference during the
Analyst and Investor Call, the Company has posted a set of information
slides on its website at www.harman.com
and accompanying this press release on www.businesswire.com.
A replay of the call will also be available following its completion at
approximately 1:00 pm EDT. The replay will be available through June 30,
2012 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: 21588697.
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 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
25 million automobiles on the road today are equipped with HARMAN audio
and infotainment systems. HARMAN has a workforce of about 13,000 people
across the Americas, Europe and Asia, and reported net sales of $4.3
billion for the twelve months ended March 31, 2012. The Company's shares
are traded on the New York Stock Exchange under the symbol NYSE:HAR.
A reconciliation of the non-GAAP measures included in this press release
to the most comparable GAAP measures is provided in the tables contained
at the end of this press release. HARMAN does not intend for this
information to be considered in isolation or as a substitute for other
measures prepared in accordance with GAAP.
Forward-Looking Information
Except for historical information contained herein, the matters
discussed in this earnings release are forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act.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 infotainment
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 complying 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) 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; (14) our
ability to enforce or defend our ownership and use of intellectual
property rights; and (15) other risks detailed in Harman International
Industries, Incorporated Annual Report on Form 10-K for the fiscal year
ended June 30, 2011 and other filings made by the Company with the
Securities and Exchange Commission. We undertake 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 calculates its awarded business using various assumptions
including global vehicle production forecasts, customer take rates for
the Company's products, revisions to product life cycle estimates and
the impact of annual price reductions, among other factors.These
assumptions are updated on an annual basis.The Company updates
the estimates quarterly by adding the value of new awards received and
subtracting sales recorded during the quarter.
HAR-E
APPENDIX
Infotainment Division
FY 2012 Key Figures - Infotainment
Three Months Ended March 31
Nine Months Ended March 31
Increase
(Decrease)
Increase
(Decrease)
$ millions
3M
FY12
3M
FY11
Including
Currency
Changes
Excluding
Currency
Changes2
9M
FY12
9M
FY11
Including
Currency
Changes
Excluding
Currency
Changes2
Net sales
610
530
15
%
19
%
1,813
1,477
23
%
22
%
Gross profit
139
99
40
%
45
%
422
295
43
%
42
%
Percent of net sales
22.7
%
18.8
%
23.2
%
20.0
%
SG&A & Other
95
78
22
%
26
%
281
234
20
%
18
%
Operating income
44
22
102
%
115
%
141
61
131
%
136
%
Percent of net sales
7.2
%
4.1
%
7.8
%
4.1
%
Restructuring-related costs
1
5
2
9
Non-GAAP1
Gross profit
140
101
39
%
45
%
425
298
43
%
42
%
Percent of net sales
23.0
%
19.0
%
23.4
%
20.2
%
SG&A & Other
95
74
28
%
32
%
282
228
23
%
22
%
Operating income
45
26
70
%
80
%
143
69
106
%
110
%
Percent of net sales
7.3
%
5.0
%
7.9
%
4.7
%
1,2 A non-GAAP measure, see reconciliations of non-GAAP measures
later in this release.
Net sales in the third quarter were $610 million, an increase of 15
percent, or 19 percent in local currency. Higher sales were driven by
robust demand in the luxury automotive segment and rapid adoption of the
scalable platform in the mid segment car market. Continued growth in
BRIC countries was led by 26 percent growth in China. Gross margin on a
non-GAAP basis in the third quarter increased 4.0 percentage points to
23.0 percent.
As a percentage of sales on a non-GAAP basis, SG&A and Other increased
160 basis points to 15.6 percent. Excluding the one-time gain from the
sale of intellectual property in the same period last year, the SG&A and
Other expense was reduced by 150 basis points.
The infotainment division has gone through a major transformation from a
loss position to an industry profit leader. Third quarter operating
margin, on a non-GAAP basis, was 7.3 percent, compared to 5.0 percent in
the same period last year. Last year's operating margin included a gain
of 3.1 percent from the one-time sale of intellectual property.
Infotainment Division Highlights
HARMAN's strategic focus on the high-growth emerging markets was
validated by the largest ever multi-year orders with three domestic
automakers in China and India. HARMAN won its first orders with Geely,
China's largest domestic automaker, and BAIC Motors. In addition, HARMAN
replaced a competitor to supply cross car-line infotainment systems to
the domestic Indian automaker Tata Motors.
HARMAN launched a scalable infotainment system for the new Ferrari F12,
featuring speech-to-text and text-to-speech options for SMS messaging.
Also during the quarter, HARMAN announced that its Aha Radio offering
extended its customer base with Acura and rolled out its cloud-based
infotainment service in Europe. The Aha platform brings
automotive-specific apps and personalized user content safely into
vehicles.
At the Geneva Motor Show, the Company introduced its latest innovations
in infotainment such as the personalized dashboard, which offers a
dynamic interface between driver, car and the connected world around it.
In addition, HARMAN demonstrated the integration of 4G/Long Term
Evolution (LTE) technology into infotainment systems providing
cutting-edge car connectivity.
HARMAN continues to drive innovation in infotainment technologies and
was awarded Toyota Motor Corporation's coveted Technology & Development
Award.
Lifestyle Division
FY 2012 Key Figures - Lifestyle
Three Months Ended March 31
Nine Months Ended March 31
Increase (Decrease)
Increase (Decrease)
$ millions
3M
FY12
3M
FY11
Including
Currency
Changes
Excluding
Currency
Changes2
9M
FY12
9M
FY11
Including
Currency
Changes
Excluding
Currency
Changes2
Net sales
332
276
20
%
22
%
1,001
835
20
%
19
%
Gross profit
92
91
1
%
3
%
283
272
4
%
4
%
Percent of net sales
27.8
%
32.9
%
28.3
%
32.5
%
SG&A & Other
63
58
8
%
10
%
181
173
5
%
4
%
Operating income
29
32
(10
%)
(9
%)
102
98
3
%
4
%
Percent of net sales
8.8
%
11.7
%
10.2
%
11.8
%
Restructuring-related costs
0
3
1
4
Non-GAAP1
Gross profit
92
91
1
%
3
%
283
272
4
%
4
%
Percent of net sales
27.8
%
32.9
%
28.3
%
32.5
%
SG&A & Other
63
56
13
%
15
%
180
169
6
%
6
%
Operating income
30
35
(17
%)
(16
%)
103
102
0
%
1
%
Percent of net sales
8.9
%
12.8
%
10.2
%
12.2
%
1,2 A non-GAAP measure, see reconciliations of non-GAAP measures
later in this release.
Net sales in the third quarter were $332 million, an increase of 20
percent, or 22 percent in local currency. Higher sales were primarily
driven by robust demand in the luxury automotive segment and continued
growth in BRIC countries, led by 60 percent growth in China.
Pass-through neodymium cost surcharges contributed 5 percent of the
growth in revenue at zero margin. Gross margin on a non-GAAP basis in
the third quarter decreased 5.1 percentage points to 27.8 percent. The
reduction was primarily due to neodymium cost increases and investments
related to completion of new production capacity in China and Mexico. We
expect favorable margin development due to reduced neodymium cost impact
as well as productivity gains as these new facilities fully ramp up in
the coming quarters.
SG&A and Other expense as a percentage of sales, on a non-GAAP basis, in
the third quarter declined 120 basis points to 18.9 percent.
Lifestyle Division Highlights
The Company entered into a multi-year, cross carline branded audio
relationship with BMW AG using the Harman Kardon brand of high
performance audio systems for the X3, 5, 6, and 7 series luxury vehicle
platforms. The Company also extended its premium audio relationship with
Daimler for Harman Kardon branded audio systems on Mercedes M, GLK, A,
B, SLK, and SL class luxury vehicle platforms.
HARMAN's expansion into the emerging markets continued with the largest
ever branded audio awards in China and India. In China, BAIC selected
the JBL brand for their C80 platform, while Great Wall Motors chose the
Infinity brand for three new vehicles. In India, Tata Motors will launch
a JBL premium branded audio system in the Tata Aria later in 2012. These
multi-year contracts further strengthen the strong order backlog for
branded audio systems which stands at over $3.2 billion.
The Company also received an order from Volvo for HARMAN's patented
audio signal processing technology, eESS (external Engine Sound
Synthesis). This award reinforces HARMAN's technology solutions for
electric & hybrid vehicles safety requirements. The Company is in
discussions with several other car companies for new noise cancelling
and sound synthesis technology deployment.
At the Geneva Motor Show HARMAN unveiled several new audio systems
together with automotive OEMs. Ferrari unveiled the JBL Professional
branded audio system onboard the automaker's new F12 model featuring
HARMAN's revolutionary QuantumLogic™ surround sound technology. JBL
premium audio was introduced for the new Peugeot 208. Harman Kardon
premium branded audio system was launched in the MINI Roadster R59, and
Mercedes-Benz unveiled the all new A-Class with a Harman Kardon surround
sound system featuring LOGIC7™.
HARMAN's products for home and personal audio achieved significant
milestones in this quarter. The JBL On Beat series of iPad docks sold
more than 135,000 units year-to-date with the flagship JBL On Beat
Xtreme continuing to win rave reviews with sales crossing 23,000 units
year-to-date. Harman Kardon BDS continues to set the reference for a
premium beautiful sound home theatre experience with more than 47,000
units sold year-to-date.
The Company also extended its global JBL "Hear the Truth" campaign by
featuring Sir Paul McCartney on TV and print ads launched during the
Grammy awards ceremony. This complements the previously launched JBL
"Hear the Truth" campaign featuring Maroon 5 and the "Harman Kardon
Beautiful Sound" campaign featuring Jennifer Lopez. These campaigns are
helping increase overall brand awareness, driving car audio take rates,
home audio and multimedia sales.
Professional Division
FY 2012 Key Figures - Professional
Three Months Ended March 31
Nine Months Ended March 31
Increase (Decrease)
Increase (Decrease)
$ millions
3M
FY12
3M
FY11
Including
Currency
Changes
Excluding
Currency
Changes2
9M
FY12
9M
FY11
Including
Currency
Changes
Excluding
Currency
Changes2
Net sales
153
142
8
%
9
%
459
429
7
%
6
%
Gross profit
60
58
3
%
5
%
180
175
3
%
2
%
Percent of net sales
39.4
%
41.2
%
39.2
%
40.8
%
SG&A & Other
47
39
21
%
22
%
122
109
12
%
11
%
Operating income
14
20
(31
%)
(30
%)
58
66
(13
%)
(14
%)
Percent of net sales
8.9
%
13.8
%
12.6
%
15.5
%
Restructuring-related costs
7
2
8
(1
)
Non-GAAP1
Gross profit
60
58
3
%
4
%
180
174
3
%
2
%
Percent of net sales
39.4
%
41.2
%
39.3
%
40.7
%
SG&A & Other
40
37
8
%
9
%
114
109
5
%
4
%
Operating income
20
21
(5
%)
(4
%)
66
66
1
%
0
%
Percent of net sales
13.3
%
15.1
%
14.4
%
15.3
%
1,2 A non-GAAP measure, see reconciliations of non-GAAP measures
later in this release.
Net sales in the third quarter were $153 million, an increase of 8
percent, or 9 percent in local currency. Gross margin on a non-GAAP
basis in the third quarter decreased 180 basis points to 39.4 percent.
The primary reason for the gross margin decline was higher costs for
neodymium magnets and investments related to completion of new
production capacity in China. SG&A and Other expense on a non-GAAP basis
in the third quarter was unchanged as a percentage of sales at 26.1
percent. We expect favorable margin development due to reduced neodymium
cost impact as well as revenue from high margin new products in the
coming quarters.
Professional Division Highlights
HARMAN audio components including JBL loudspeakers and AKG microphones
played a crucial role in the live sound reinforcement system at the 54th
Annual GRAMMY® Awards at the Staples Center in Los Angeles. JBL
loudspeakers with Crown amplifiers were featured in the sound system for
the halftime entertainment performance at Super Bowl XLVI, featuring
Madonna. The 39th annual American Music Awards show was also supported
by JBL loudspeakers.
HARMAN professional audio systems were deployed in a variety of venues
including performing arts theaters such as the Gotham and City Center
Theaters in New York City; cinemas in India; stadiums in Poland; and the
Museum of Science Planetarium in Boston. HARMAN digital broadcasting
consoles were deployed in TV and radio studios in Germany, Canada,
France, China, Malaysia, and Mexico.
More than 30 new HARMAN products were launched during the quarter,
including conferencing and digital performance microphone systems, high
powered multi-channel amplifiers, a compact digital mixer, and new
music-production and recording plug-ins and other software applications.
Several of these newly-introduced HARMAN audio products garnered awards
including two Sound On Sound music awards for Lexicon, and a MIPA
(Musicmesse International Press Award) for JBL's new VTX loudspeaker
system.
Other (Corporate)
FY 2012 Key Figures - Other
Three Months Ended March 31
Nine Months Ended March 31
Increase (Decrease)
Increase (Decrease)
$ millions
3M
FY12
3M
FY11
Including
Currency
Changes
Excluding
Currency
Changes2
9M
FY12
9M
FY11
Including
Currency
Changes
Excluding
Currency
Changes2
SG&A & Other
28
20
39
%
39
%
73
62
17
%
17
%
Restructuring-related costs
(1
)
0
(1
)
0
Non-GAAP1
SG&A & Other
28
20
39
%
39
%
73
62
17
%
17
%
1,2 A non-GAAP measure, see reconciliations of non-GAAP measures
later in this release.
The Company continued the rollout of its global marketing campaigns. The
Company's Corporate Technology Center is driving and enabling
cutting-edge development in connectivity and networking, cloud
computing, wireless technologies, digital signal processing, and
energy-efficient solutions. The Company is building on its base of more
than 4000 patents and patents pending, with more than 200 patents issued
and more than 250 patent applications filed worldwide this fiscal year.
(In thousands, except earnings per share data; unaudited)
Three Months Ended March 31,
Nine Months Ended March 31,
2012
2011
2012
2011
Net sales
$
1,095,675
$
948,196
$
3,273,307
$
2,741,223
Cost of sales
803,045
699,371
2,387,496
1,999,087
Gross profit
292,630
248,825
885,811
742,136
Selling, general and administrative expenses
232,755
211,362
656,681
594,108
Sale of Intellectual Property
0
(16,184
)
(301
)
(16,184
)
Operating income
59,875
53,647
229,431
164,212
Other expenses:
Interest expense, net
5,394
5,262
14,729
17,172
Foreign exchange losses, net
109
161
11,706
786
Miscellaneous, net
841
1,303
4,240
4,610
Income before income taxes
53,531
46,921
198,756
141,644
Income tax expense, net
(119,125
)
10,321
(81,522
)
24,604
Net income
$
172,656
$
36,600
$
280,278
$
117,040
Earnings per share:
Basic
$
2.41
$
0.51
$
3.93
$
1.65
Diluted
$
2.38
$
0.51
$
3.88
$
1.64
Weighted average shares outstanding:
Basic
71,622
71,123
71,395
70,918
Diluted
72,604
71,924
72,263
71,541
Harman International Industries, Incorporated
Consolidated Balance Sheets
(In thousands; unaudited)
March 31,
2012
June 30,
2011
ASSETS
Current assets
Cash and cash equivalents
$
640,558
$
603,892
Short-term investments
127,201
317,322
Accounts receivable
689,018
579,272
Inventories
501,071
423,137
Other current assets
237,366
184,532
Total current assets
2,195,214
2,108,155
Property, plant and equipment
437,918
470,300
Goodwill
186,445
119,357
Deferred tax assets, long term
316,964
229,941
Other assets
145,443
130,742
Total assets
$
3,281,984
$
3,058,495
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt
$
391,268
$
386
Short-term debt
246
1,785
Accounts payable
461,566
473,486
Accrued liabilities
410,356
436,537
Accrued warranties
102,384
122,396
Income taxes payable
12,308
12,991
Total current liabilities
1,378,128
1,047,581
Convertible senior notes
0
378,401
Pension liability
146,542
142,136
Other non-current liabilities
101,597
66,719
Total liabilities
1,626,267
1,634,837
Total equity
1,655,717
1,423,658
Total liabilities and equity
$
3,281,984
$
3,058,495
Harman International Industries, Incorporated
Reconciliation of GAAP to Non-GAAP Results
(In thousands, except earnings per share data; unaudited)
Three Months Ended March 31, 2012
GAAP
Adjustments
Non-GAAP
Net sales
$
1,095,675
$
0
$
1,095,675
Cost of sales
803,045
(626)a
802,419
Gross profit
292,630
626
293,256
Selling, general and administrative expenses
232,755
(6,882)b
225,873
Sale of Intellectual Property
0
0
0
Operating income
59,875
7,508
67,383
Other expenses:
Interest expense, net
5,394
5,394
Foreign exchange losses, net
109
109
Miscellaneous, net
841
841
Income before income taxes
53,531
7,508
61,039
Income tax expense, net
(119,125
)
126,765(c
)
7,640
Net income
$
172,656
$
(119,257
)
$
53,399
Earnings per share:
Basic
$
2.41
$
(1.67
)
$
0.75
Diluted
$
2.38
$
(1.64
)
$
0.74
Weighted average shares outstanding:
Basic
71,622
71,622
Diluted
72,604
72,604
a) Restructuring expense in Cost of Sales was $0.6 million due to
projects to increase efficiency in manufacturing.
b) Restructuring expense in SG&A was $6.9 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 statutory tax
rate within that specific country and the release of a deferred tax
asset valuation allowance.
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.
Harman International Industries, Incorporated
Reconciliation of GAAP to Non-GAAP Results
(In thousands, except earnings per share data; unaudited)
Nine Months Ended March 31, 2012
GAAP
Adjustments
Non-GAAP
Net sales
$
3,273,307
$
0
$
3,273,307
Cost of sales
2,387,496
(2,592)a
$
2,384,904
Gross profit
885,811
2,592
888,403
Selling, general and administrative expenses
656,681
(7,829)b
648,852
Sale of Intellectual Property
(301
)
0
(301
)
Operating income
229,431
10,420
239,851
Other expenses:
Interest expense, net
14,729
0
14,729
Foreign exchange losses, net
11,706
0
11,706
Miscellaneous, net
4,240
0
4,240
Income before income taxes
198,756
10,420
209,176
Income tax expense, net
(81,522
)
127,646(c
)
46,124
Net income
$
280,278
$
(117,226
)
$
163,052
Earnings per share:
Basic
$
3.93
$
(1.64
)
$
2.28
Diluted
$
3.88
$
(1.62
)
$
2.26
Weighted average shares outstanding:
Basic
71,395
71,395
Diluted
72,263
72,263
a) Restructuring expense in Cost of Sales was $2.6 million due to
projects to increase efficiency in manufacturing.
b) Restructuring expense in SG&A was $7.8 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 statutory tax
rate within that specific country and the release of a deferred tax
asset valuation allowance.
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.
Harman International Industries, Incorporated
Reconciliation of GAAP to Non-GAAP Results
(In thousands, except earnings per share data; unaudited)
Three Months Ended March 31, 2011
GAAP
Adjustments
Non-GAAP
Net sales
$
948,196
$
0
$
948,196
Cost of sales
699,371
(1,319)a
698,052
Gross profit
248,825
1,319
250,144
Selling, general and administrative expenses
211,362
(8,220)b
203,142
Sale of Intellectual Property
(16,184
)
0
(16,184
)
Operating income
53,647
9,539
63,186
Other expenses:
Interest expense, net
5,262
0
5,262
Foreign exchange losses, net
161
0
161
Miscellaneous, net
1,303
0
1,303
Income before income taxes
46,921
9,539
56,460
Income tax expense, net
10,321
2,762(c
)
13,083
Net income
$
36,600
$
6,777
$
43,377
Earnings per share:
Basic
$
0.51
$
0.10
$
0.61
Diluted
$
0.51
$
0.09
$
0.60
Weighted average shares outstanding:
Basic
71,123
71,123
Diluted
71,924
71,924
a) Restructuring expense in Cost of Sales was $1.3 million due to
projects to increase efficiency in manufacturing.
b) Restructuring expense in SG&A was $8.2 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 statutory tax
rate within that specific country and the release of a deferred tax
asset valuation allowance.
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.
Harman International Industries, Incorporated
Reconciliation of GAAP to Non-GAAP Results
(In thousands, except earnings per share data; unaudited)
Nine Months Ended March 31, 2011
GAAP
Adjustments
Non-GAAP
Net sales
$
2,741,223
$
0
$
2,741,223
Cost of sales
1,999,087
(2,371)a
1,996,716
Gross profit
742,136
2,371
744,507
Selling, general and administrative expenses
594,108
(9,344)b
584,764
Sale of Intellectual Property
(16,184
)
0
(16,184
)
Operating income
164,212
11,715
175,927
Other expenses:
Interest expense, net
17,172
0
17,172
Foreign exchange losses, net
786
0
786
Miscellaneous, net
4,610
0
4,610
Income before income taxes
141,644
11,715
153,359
Income tax expense, net
24,604
3,832(c
)
28,436
Net income
$
117,040
$
7,883
$
124,923
Earnings per share:
Basic
$
1.65
$
0.11
$
1.76
Diluted
$
1.64
$
0.11
$
1.75
Weighted average shares outstanding:
Basic
70,918
70,918
Diluted
71,541
71,541
a) Restructuring expense in Cost of Sales was $2.4 million due to
projects to increase efficiency in manufacturing.
b) Restructuring expense in SG&A was $9.3 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 statutory tax
rate within that specific country and the release of a deferred tax
asset valuation allowance.
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.
Harman International Industries, Incorporated
Reconciliation of GAAP to Non-GAAP Results
Foreign Currency Translation Impact
(In thousands; unaudited)
Three Months Ended March 31,
Increase
(Decrease)
2012
2011
Net sales - nominal currency
$
1,095,675
$
948,196
16
%
Effect of foreign currency translation1
(25,253
)
Net sales - local currency
1,095,675
922,943
19
%
Gross profit - nominal currency
292,630
248,825
18
%
Effect of foreign currency translation1
(5,864
)
Gross profit - local currency
292,630
242,961
20
%
SG&A & Other - nominal currency
232,755
211,362
11
%
Effect of foreign currency translation1
(4,728
)
SG&A & Other - local currency
232,755
206,634
12
%
Operating income - nominal currency
59,875
53,647
12
%
Effect of foreign currency translation1
(2,073
)
Operating income - local currency
59,875
51,574
16
%
1Impact 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.
Harman International Industries, Incorporated
Reconciliation of GAAP to Non-GAAP Results
Foreign Currency Translation Impact
EXCLUDING restructuring charges
(In thousands; unaudited)
Three Months Ended March 31,
Increase
(Decrease)
2012
2011
Net sales - nominal currency
$
1,095,675
$
948,196
16
%
Effect of foreign currency translation1
(25,253
)
Net sales - local currency
1,095,675
922,943
19
%
Gross profit - nominal currency
293,257
250,144
17
%
Effect of foreign currency translation1
(5,865
)
Gross profit - local currency
293,257
244,279
20
%
SG&A & Other - nominal currency
225,872
203,142
11
%
Effect of foreign currency translation1
(4,591
)
SG&A & Other - local currency
225,872
198,551
14
%
Operating income - nominal currency
67,384
63,186
7
%
Effect of foreign currency translation1
(2,210
)
Operating income - local currency
67,384
60,976
11
%
1Impact 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.
Harman International Industries, Incorporated
Reconciliation of GAAP to Non-GAAP Results
Foreign Currency Translation Impact
(In thousands; unaudited)
Nine Months Ended March 31,
Increase
(Decrease)
2012
2011
Net sales - nominal currency
$
3,273,307
$
2,741,223
19
%
Effect of foreign currency translation1
17,433
Net sales - local currency
3,273,307
2,758,656
19
%
Gross profit - nominal currency
885,811
742,136
19
%
Effect of foreign currency translation1
4,593
Gross profit - local currency
885,811
746,729
19
%
SG&A & Other - nominal currency
656,681
594,108
11
%
Effect of foreign currency translation1
4,333
SG&A & Other - local currency
656,681
598,441
10
%
Operating income - nominal currency
229,431
164,212
40
%
Effect of foreign currency translation1
(676
)
Operating income - local currency
229,431
163,536
40
%
1Impact 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.
Harman International Industries, Incorporated
Reconciliation of GAAP to Non-GAAP Results
Foreign Currency Translation Impact
EXCLUDING restructuring charges
(In thousands; unaudited)
Nine Months Ended March 31,
Increase
(Decrease)
2012
2011
Net sales - nominal currency
$
3,273,307
$
2,741,223
19
%
Effect of foreign currency translation1
17,433
Net sales - local currency
3,273,307
2,758,656
19
%
Gross profit - nominal currency
888,403
744,507
19
%
Effect of foreign currency translation1
4,475
Gross profit - local currency
888,403
748,982
19
%
SG&A & Other - nominal currency
648,852
584,764
11
%
Effect of foreign currency translation1
4,582
SG&A & Other - local currency
648,852
589,346
10
%
Operating income - nominal currency
239,851
175,927
36
%
Effect of foreign currency translation1
(1,042
)
Operating income - local currency
239,851
174,885
37
%
1Impact 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.
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