Harman International Industries, Incorporated press release

Exhibit 99.1

April 28, 2011 – FOR IMMEDIATE RELEASE

Contact: Robert V. Lardon

203.328.3518

robert.lardon@harman.com

EX-99.1 2 dex991.htm HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED PRESS RELEASE Harman International Industries, Incorporated press release

HARMAN reports 13% Increase in Sales and 100% Increase in Operating Income year over year

•

Increases Earnings per Share to $0.51 from $0.21

•

Exceeds Target for $400 Million STEP Change Cost Savings

•

Wins Large Asian Business and Expands VW Group Award to $1.6 Billion

•

Grows Scalable Platform to $3.5 Billion; Backlog of Awarded Business at $13 Billion

STAMFORD, CT, April 28, 2011 – Harman International Industries, Incorporated, the leading global audio and infotainment group (NYSE: HAR), today announced results for the third quarter ended March 31, 2011. Net sales for the quarter were $948 million, an increase of 13 percent compared to the same period last year. Third quarter operating income was $54 million, an improvement of $27 million compared to the same period last year. Earnings from continuing operations per diluted share were $0.51 for the quarter compared to $0.21 in the same period last year. On a non-GAAP basis, earnings per diluted share from continuing operations were $0.60 compared to $0.27 in the same period last year.

“Our continued focus on execution has helped us achieve a sixth consecutive quarter of top and bottom line growth,” said Dinesh C. Paliwal, the Company’s Chairman, President and CEO. “I’m pleased that we have achieved our ambitious goal of a $400 million STEP Change Cost Savings program, announced in February 2008. This early decision enabled HARMAN to overcome the global economic downturn and return to profitability faster than the industry. Having developed a culture of efficiency, we have the foundation to capitalize on multiple profitable growth opportunities. The adoption of our innovative next-generation scalable platform continues to accelerate with the VW Group’s Asian business. Awards for this platform now exceed $3.5 billion, bringing our total backlog to $13 billion. We have also won multiple orders from Chinese automotive companies for our branded audio systems. We are executing our emerging market growth strategy and excellent progress is being made across all divisions,” added Paliwal.


FY 2011 Key Figures – Total Company	Three Months Ended March 31												Nine Months Ended March 31
*All figures from continuing operations unless otherwise noted*							Increase (Decrease)												Increase (Decrease)
$ millions (except per share data)	3M FY11			3M FY10			Nominal			Local Currency¹			9M FY11			9M FY10			Nominal			Local Currency¹
Net sales		948			837			13	%		13	%		2,741			2,514			9	%		13	%
Gross profit		249			218			14	%		14	%		742			661			12	%		16	%
Percent of net sales		26.2	%		26.0	%								27.1	%		26.3	%
SG&A & Other		195			191			2	%		3	%		578			601			(4	%)		0	%
Operating income		54			27			100	%		95	%		164			60			174	%		167	%
Percent of net sales		5.7	%		3.2	%								6.0	%		2.4	%
Net Income from continuing operations attributable to Harman International Industries, Incorporated		37			15			145	%		131	%		117			17			n.m.			n.m.
Diluted earnings per share from continuing operations attributable to Harman International Industries, Incorporated		0.51			0.21									1.64			0.24
Restructuring-related costs		10			6									12			14
Goodwill impairment charge		0			0									0			12
Net Income from discontinued operations		0			3									0			8
Diluted earnings per share from Discontinued Operations		0.00			0.05									0.00			0.12
Non-GAAP from continuing operations¹
Gross profit		250			219			15	%		14	%		745			666			12	%		15	%
Percent of net sales		26.4	%		26.1	%								27.2	%		26.5	%
SG&A & Other		187			186			1	%		1	%		569			580			(2	%)		2	%
Operating income		63			33			93	%		88	%		176			86			105	%		103	%
Percent of net sales		6.7	%		3.9	%								6.4	%		3.4	%
Net Income from continuing operations attributable to Harman International Industries, Incorporated		43			19			129	%		118	%		125			39			n.m.			n.m.
Diluted earnings per share from continuing operations attributable to Harman International Industries, Incorporated		0.60			0.27									1.75			0.55
Shares outstanding – diluted (in millions)		72			71									72			71

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

Summary of Continuing Operations

Gross margin increased to 26.2 percent for the third quarter ended March 31, 2011, an improvement of 0.2 percentage points. Gross margin on a non-GAAP basis increased to 26.4 percent for the third quarter, an improvement of 0.3 percentage points. SG&A and other expense as a percentage of sales on a non-GAAP basis for the third quarter declined by 2.5 percentage points to 19.7 percent. The Company’s improved operating margin was primarily driven by higher sales, the monetizing of certain intellectual property rights, and improved productivity, largely offset by our temporarily elevated gross R&D costs required to achieve key customer milestones and higher expense related to first time ever participation at several major automotive trade shows.

HARMAN exceeded its goal of $400 million in permanent cost and productivity savings under the Company’s STEP Change Cost Savings program.

Executing Against All Four Strategic Pillars

The Company made significant progress during the quarter against each of its four strategic pillars, which form the foundation for future profitable growth.

1. Growing Automotive Audio

HARMAN’s focused branding and marketing programs with its long-standing customers such as BMW, Hyundai, Lexus/Toyota, and Mercedes Benz, are gaining traction resulting in increased penetration for branded audio systems. HARMAN is also taking its world leadership in premium branded audio to hybrid and electric cars with its patented, energy-efficient GreenEdge™ technology. Recent awards in China include branded audio for a new electric vehicle by the BYD Daimler joint venture company, the Geely Motors Emgrand EC8, and the new BYD e6 electric vehicle. In addition, HARMAN introduced its revolutionary QuantumLogic™ surround technology for its JBL^® Professional audio system in Ferrari’s new FF.

2. Growing Smart Infotainment

HARMAN is driving the adoption of new technologies that form the “Connected Car” ecosystem. During the quarter, HARMAN launched industry leading solutions for infotainment. Launched in cooperation with Toyota, the Entune™ infotainment system features ground-breaking connected car applications such as Microsoft Bing search for points of interest, iheartradio, and Pandora music search. HARMAN also launched its innovative navigation solution Becker^® MAP PILOT for Mercedes Benz, which gives drivers a feature-rich and upgradeable navigation solution without compromising the convenience of a highly integrated in-dash OEM solution.

The Company continued to leverage its leadership position, gaining scale and penetration through its award for its next-generation platform for Volkswagen Group brands Audi, SEAT, Skoda, and Volkswagen in the Asian markets. The new award builds on HARMAN’s previously announced next-generation scalable infotainment award for the automaker’s European and US marketed vehicles. Total order value of this award is now $1.6 billion, bringing our scalable platform awards to $3.5 billion.

3. Growing in Emerging Markets

HARMAN continues to expand its presence in all businesses in the emerging markets of Brazil, Russia, India and China where the Company is targeting $1.5 billion in revenues by 2015. HARMAN reports that its Dandong facility is nearing completion in China. The custom-built, 460,000 square foot facility will be HARMAN’s largest and most technologically advanced, featuring dual operations for automotive electronics and professional audio systems. The facility is expected to come on-line in July 2011.

4. Getting Costs and Capital Right

The Company noted that while it has exceeded its cost savings goal under the STEP Change program, the discipline gained in the process continues, which included the closure or consolidation of 16 HARMAN facilities and the reduction of 2250 jobs in high-cost countries during the past three years.

The Company continues to deploy its capital wisely through investments in organic growth initiatives such as its new facility in Dandong, a planned expansion of its manufacturing operation in Hungary and its new North American manufacturing and engineering facility in Queretaro, Mexico. Additionally, the Company continues to evaluate and execute a variety of capital strategies intended to drive value to shareholders including selected technology acquisitions, such as 3dB Research Limited in Vancouver Canada, and reinstatement of the quarterly dividend.

Investor and Analyst Call on April 28, 2011

On Thursday, April 28, 2011 at 11:00 a.m. EDT, 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 scheduled at 11:00 a.m. EDT should dial 1.800-891-3493 (U.S.) or +1 (212) 231-2920 (International) ten minutes before the call and reference HARMAN Access Code 21520338.

In addition, HARMAN invites you to visit the Investors section of its website at: www.harman.com where visitors can sign-up for email alerts and conveniently download copies of historical earnings releases and supporting slide presentations, among other documents. The fiscal third quarter earnings release and supporting materials will be posted on the site at approximately 8:00 a.m. EDT, Thursday, April 28, 2011.

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, 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: 21520338.

If you need technical assistance, call the toll-free Global Crossing Customer Care Line at 1(800) 473-0602 (US) 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 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 $3.6 billion for the twelve months ending March 31, 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 27A of the Securities Act of 1933 and 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 (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) the inability of our suppliers to deliver products at the scheduled rate and disruptions arising in connection therewith; (7) our ability to attract and retain qualified senior management and to prepare and implement an appropriate succession plan for our critical organizational positions; (8) our failure to implement and maintain a comprehensive disaster recovery program; (9) 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; (10) our ability to maintain a competitive technological advantage through innovation and leading product designs; (11) 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; (12) our ability to enforce or defend our ownership and use of intellectual property rights; and (13) other risks detailed in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2010 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 press release also makes 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

APPENDIX

Automotive Division


FY 2011 Key Figures – Automotive	Three Months Ended March 31												Nine Months Ended March 31
							Increase (Decrease)												Increase (Decrease)
$ millions	3M FY11			3M FY10			Nominal			Local Currency¹			9M FY11			9M FY10			Nominal			Local Currency¹
Net sales		707			630			12	%		13	%		1,978			1,841			8	%		12	%
Gross profit		164			145			13	%		13	%		470			439			7	%		12	%
Percent of net sales		23.2	%		23.0	%								23.8	%		23.8	%
SG&A & Other		108			116			(7	%)		(6	%)		322			385			(16	%)		(12	%)
Operating income		56			29			92	%		88	%		148			54			175	%		160	%
Percent of net sales		7.9	%		4.6	%								7.5	%		2.9	%
Restructuring-related costs		6			1									10			5
Goodwill impairment charge		0			0									0			12
Non-GAAP¹
Gross profit		165			145			14	%		14	%		473			441			7	%		12	%
Percent of net sales		23.3	%		23.1	%								23.9	%		23.9	%
SG&A & Other		104			115			(10	%)		(9	%)		315			369			(15	%)		(10	%)
Operating income		61			31			101	%		97	%		159			72			121	%		114	%
Percent of net sales		8.7	%		4.9	%								8.0	%		3.9	%

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

Net sales in the third quarter were $707 million, an increase of 12 percent or 13 percent in local currency, driven by higher production volumes in Automotive and market share gains in the Infotainment business. Gross margin on a non-GAAP basis in the third quarter increased slightly to 23.3 percent from 23.1 percent. SG&A and other expense on a non-GAAP basis in the third quarter was $104 million compared to $115 million in the prior year. The division’s improved operating margin was primarily driven by higher sales, the monetizing of certain intellectual property rights, and improved productivity, largely offset by our temporarily elevated gross R&D costs required to achieve key customer milestones and higher expense related to first time ever participation at several major automotive trade shows.

Automotive Division Highlights

During the quarter, HARMAN launched three industry leading solutions for infotainment and branded audio. Launched in cooperation with Toyota, the Entune™ infotainment system features ground-breaking connected car applications such as Microsoft Bing search for points of interest, iheartradio, and Pandora music search. In addition, HARMAN introduced its revolutionary QuantumLogic™ surround technology for its JBL^® Professional audio system in Ferrari’s new FF. HARMAN also launched its innovative navigation solution, Becker^® MAP PILOT for Mercedes Benz, which gives drivers a feature-rich and upgradeable navigation solution without compromising the convenience of a highly integrated in-dash OEM solution.

HARMAN demonstrated its broad range of connected infotainment solutions in the Rinspeed “BamBoo” concept car – the world’s first social networking vehicle – at the Geneva Auto Show. Technologies included Aha Radio on-demand, interactive, personalized radio, along with its GreenEdge energy-efficient audio solutions and HALOsonic technologies for electric vehicles.

HARMAN is collaborating with Sierra Wireless, a leader in high-speed mobile computing and wireless machine-to-machine communication, to pioneer 4G broadband connectivity for automotive customers. Together with speech-recognition leader Nuance, HARMAN Automotive is continuing to develop intuitive, intelligent voice solutions for today’s connected car.

HARMAN was awarded additional business to provide next-generation scalable infotainment systems for Volkswagen Group’s new vehicle platforms in the Asian markets. The new award builds on HARMAN’s previously announced next-generation scalable infotainment award for Volkswagen Group’s European and US marketed vehicles. Total order value of this award is now $1.6 Billion. Additional recent awards in China include branded audio for a new electric vehicle by the BYD Daimler joint venture company, the Geely Motors Emgrand EC8, and the new BYD e6 electric vehicle.

Consumer Division


FY 2011 Key Figures – Consumer	Three Months Ended March 31												Nine Months Ended March 31
							Increase (Decrease)												Increase (Decrease)
$ millions	3M FY11			3M FY10			Nominal			Local Currency¹			9M FY11			9M FY10			Nominal			Local Currency¹
Net sales		95			81			17	%		17	%		320			292			10	%		14	%
Gross profit		26			22			17	%		17	%		93			80			17	%		21	%
Percent of net sales		27.7	%		27.6	%								29.0	%		27.3	%
SG&A & Other		28			23			19	%		19	%		83			74			12	%		15	%
Operating income		(1	)		(1	)		90	%		83	%		10			6			74	%		138	%
Percent of net sales		(1.5	%)		(0.9	%)								3.1	%		2.0	%
Restructuring-related costs		2			1									2			4
Goodwill impairment charge		0			0									0			0
Non-GAAP¹
Gross profit		26			23			16	%		16	%		93			80			16	%		21	%
Percent of net sales		27.7	%		27.8	%								28.9	%		27.3	%
SG&A & Other		26			23			12	%		12	%		81			70			15	%		18	%
Operating income		1			0			n.m.			n.m.			12			10			23	%		45	%
Percent of net sales		0.7	%		(0.3	%)								3.7	%		3.3	%

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

Net sales in the third quarter were $95 million, an increase of 17 percent. This growth was driven by increased market share in the Latin American and Asian markets. Gross margin on a non-GAAP basis in the third quarter was basically flat. SG&A expense on a non-GAAP basis in the third quarter was $26 million compared to $23 million in the prior year. The increase was primarily due to expanded sales channel expense and increased marketing activities.

Consumer Division Highlights

HARMAN launched 17 new products during the third quarter, which represented more than 25% of revenue.

The Company reported excellent growth in Brazil, India and China as a result of both strong market demand and increased penetration.

HARMAN continues to add new points of sale and has improved its position with Apple, Best Buy and Target, based on the launch of its JBL OnAir and OnBeat multimedia products.

The harman/kardon BDS Series of home theater systems continues gaining share in Europe and is now launching in the Americas and Asia.

Professional Division


FY 2011 Key Figures – Professional	Three Months Ended March 31												Nine Months Ended March 31
							Increase (Decrease)												Increase (Decrease)
$ millions	3M FY11			3M FY10			Nominal			Local Currency¹			9M FY11			9M FY10			Nominal			Local Currency¹
Net sales		146			126			16	%		15	%		442			380			16	%		17	%
Gross profit		59			50			17	%		15	%		178			147			21	%		21	%
Percent of net sales		40.1	%		39.9	%								40.3	%		38.8	%
SG&A & Other		39			35			11	%		10	%		111			95			16	%		17	%
Operating income		19			15			29	%		28	%		68			52			29	%		29	%
Percent of net sales		13.2	%		11.8	%								15.3	%		13.8	%
Restructuring-related costs		2			4									(1	)		4
Goodwill impairment charge		0			0									0			0
Non-GAAP¹
Gross profit		59			51			16	%		14	%		178			149			19	%		19	%
Percent of net sales		40.2	%		40.3	%								40.2	%		39.3	%
SG&A & Other		38			32			17	%		16	%		111			93			19	%		20	%
Operating income		21			19			12	%		11	%		67			56			18	%		18	%
Percent of net sales		14.4	%		14.9	%								15.1	%		14.8	%

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

Net sales in the third quarter were $146 million, an increase of 16 percent, or 15 percent in local currency. This growth was driven by increased market share in the Latin American and Asian markets. Gross margin on a non-GAAP basis in the third quarter decreased slightly to 40.2 percent. SG&A expense on a non-GAAP basis in the third quarter was $38 million compared to $32 million in the prior year. The increase was primarily due to expanded sales channel expense and increased marketing activities.

Professional Division Highlights

HARMAN sound systems were used at the recent GRAMMY® Awards, Super Bowl XLV, the Oscars®, the Country Music Awards, and the Indian National Games. JBL VerTec Subcompact Line Array speakers received the prestigious audio industry TEC Award at the January NAMM music dealers show. JBL’s PRX600 powered speaker product line won the Music & Sound Retailer 2011 Reader’s Award for Best Speaker of 2010.

Notable installations during the quarter included the Houston Astros’ baseball stadium, Ontario, Canada’s court houses, and the Dolphin Resort Hotel at Disney World.

Other (Corporate)


FY 2011 Key Figures – Other	Three Months Ended March 31										Nine Months Ended March 31
					Increase (Decrease)										Increase (Decrease)
$ millions	3M FY11		3M FY10		Nominal			Local Currency¹			9M FY11		9M FY10		Nominal			Local Currency¹
SG&A & Other		20		16		23	%		23	%		62		48		30	%		30	%
Restructuring-related costs		0		0								0		0
Non-GAAP¹
SG&A & Other		20		16		24	%		24	%		62		48		30	%		30	%

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

SG&A expense increased in the third quarter 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.

Harman International Industries, Incorporated

Consolidated Statements of Operations


	Three Months Ended March 31,					Nine Months Ended March 31,
(In thousands, except earnings per share data; unaudited)	2011			2010		2011			2010
Net sales	$	948,196		$	837,011	$	2,741,223		$	2,513,712
Cost of sales		699,371			619,379		1,999,087			1,852,218

Gross profit		248,825			217,632		742,136			661,494
Selling, general and administrative expenses		211,362			190,748		594,108			576,055
Loss on deconsolidation of variable interest entity		0			0		0			13,122
Sale of Intellectual Property		(16,184	)		0		(16,184	)		0
Goodwill impairment		0			0		0			12,292

Operating income		53,647			26,884		164,212			60,025
Other expenses:
Interest expense, net		5,262			5,762		17,172			23,950
Miscellaneous, net		1,464			1,572		5,396			3,719

Income from continuing operations before taxes		46,921			19,550		141,644			32,356
Income tax expense		10,321			4,629		24,604			10,326

Income from continuing operations net of taxes		36,600			14,921		117,040			22,030
Income from discontinued operations net of taxes		0			3,339		0			8,145

Net income		36,600			18,260		117,040			30,175
Less: Net income attributable to non-controlling interest		0			0		0			5,289

Net income attributable to Harman International Industries, Incorporated	$	36,600		$	18,260	$	117,040		$	24,886

Net income from continuing operations attributable to Harman International Industries, Incorporated:
Income from continuing operations, net of taxes	$	36,600		$	14,921	$	117,040		$	22,030
Less: Net income attributable to non-controlling interest		0			0		0			5,289

Net income from continuing operations attributable to Harman International Industries, Incorporated	$	36,600		$	14,921	$	117,040		$	16,741

Earnings per share from continuing operations attributable to Harman International Industries, Incorporated:
Basic	$	0.51		$	0.21	$	1.65		$	0.24
Diluted	$	0.51		$	0.21	$	1.64		$	0.24
Earnings per share from discontinued operations:
Basic	$	0.00		$	0.05	$	0.00		$	0.12
Diluted	$	0.00		$	0.05	$	0.00		$	0.12
Earnings per share:
Basic	$	0.51		$	0.26	$	1.65		$	0.35
Diluted	$	0.51		$	0.26	$	1.64		$	0.35
Weighted average shares outstanding:
Basic		71,123			70,531		70,918			70,300
Diluted		71,924			70,905		71,541			70,536

Harman International Industries, Incorporated

Consolidated Balance Sheets


(In thousands; unaudited)	March 31, 2011		June 30, 2010
ASSETS
Current assets
Cash and cash equivalents	$	426,696	$	645,570
Short-term investments		340,777		0
Accounts receivable		599,969		517,092
Inventories		455,070		353,123
Other current assets		183,539		158,194

Total current assets		2,006,051		1,673,979
Property, plant and equipment		446,579		421,949
Goodwill		116,366		105,922
Deferred tax assets, long term		242,750		247,602
Other assets		129,504		106,763

Total assets	$	2,941,250	$	2,556,215


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Current portion of long-term debt	$	960	$	463
Short-term debt		2,073		13,472
Accounts payable		428,395		382,985
Accrued liabilities		425,732		363,261
Accrued warranties		110,768		99,329
Income taxes payable		14,821		3,941

Total current liabilities		982,749		863,451
Convertible senior notes		374,485		362,693
Other senior debt		486		1,209
Other non-current liabilities		230,381		193,970

Total liabilities		1,588,101		1,421,323

Total equity		1,353,149		1,134,892

Total liabilities and equity	$	2,941,250	$	2,556,215

Harman International Industries, Incorporated

Reconciliation of GAAP to Non-GAAP Results


	Three Months Ended March 31, 2011
(In thousands, except earnings per share data; unaudited)	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
Loss on deconsolidation of variable interest entity		0			0			0
Sale of Intellectual Property		(16,184	)		0			(16,184	)
Goodwill impairment		0			0			0

Operating income		53,647			9,539			63,186
Other expenses:
Interest expense, net		5,262			0			5,262
Miscellaneous, net		1,464			0			1,464

Income from continuing operations before taxes		46,921			9,539			56,460
Income tax expense		10,321			2,762	^c		13,083

Income from continuing operations net of taxes		36,600			6,777			43,377
Less: Net income attributable to non-controlling interest		0			0			0

Net income from continuing operations attributable to Harman International Industries, Incorporated	$	36,600		$	6,777		$	43,377

Earnings per share from continuing operations attributable to Harman International Industries, Incorporated:
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 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.

Harman International Industries, Incorporated

Reconciliation of GAAP to Non-GAAP Results


	Nine Months Ended March 31, 2011
(In thousands, except earnings per share data; unaudited)	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
Loss on deconsolidation of variable interest entity		0			0			0
Sale of Intellectual Property		(16,184	)		0			(16,184	)
Goodwill impairment		0			0			0

Operating income		164,212			11,715			175,927
Other expenses:
Interest expense, net		17,172			0			17,172
Miscellaneous, net		5,396			0			5,396

Income from continuing operations before taxes		141,644			11,715			153,359
Income tax expense		24,604			3,832	^c		28,436

Income from continuing operations net of taxes		117,040			7,883			124,923
Less: Net income attributable to non-controlling interest		0			0			0

Net income from continuing operations attributable to Harman International Industries, Incorporated	$	117,040		$	7,883		$	124,923

Earnings per share from continuing operations attributable to Harman International Industries, Incorporated:
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 discrete tax rate within that specific country.

Harman International Industries, Incorporated

Reconciliation of GAAP to Non-GAAP Results


	Three Months Ended March 31, 2010
(In thousands, except earnings per share data; unaudited)	GAAP		Adjustments			Non-GAAP
Net sales	$	837,011	$	0		$	837,011
Cost of sales		619,379		(880	)^a		618,499

Gross profit		217,632		880			218,512
Selling, general and administrative expenses		190,748		(5,036	)^b		185,712
Loss on deconsolidation of variable interest entity		0		0			0
Sale of Intellectual Property		0		0			0
Goodwill impairment		0		0			0

Operating income		26,884		5,916			32,800
Other expenses:
Interest expense, net		5,762		0			5,762
Miscellaneous, net		1,572		0			1,572

Income from continuing operations before taxes		19,550		5,916			25,466
Income tax expense		4,629		1,877	^c		6,506

Income from continuing operations net of taxes		14,921		4,039			18,960
Less: Net income attributable to non-controlling interest		0		0			0

Net income from continuing operations attributable to Harman International Industries, Incorporated	$	14,921	$	4,039		$	18,960

Earnings per share from continuing operations attributable to Harman International Industries, Incorporated:
Basic	$	0.21	$	0.06		$	0.27
Diluted	$	0.21	$	0.06		$	0.27
Weighted average shares outstanding:
Basic		70,531					70,531
Diluted		70,905					70,905

(a)	Restructuring expense in Cost of Sales was $0.9 million due to projects to increase efficiency in manufacturing.

(b)	Restructuring expense in SG&A was $5.0 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 Industries, Incorporated

Reconciliation of GAAP to Non-GAAP Results


	Nine Months Ended March 31, 2010
(In thousands, except earnings per share data; unaudited)	GAAP		Adjustments			Non-GAAP
Net sales	$	2,513,712	$	0		$	2,513,712
Cost of sales		1,852,218		(4,253	)^a		1,847,965

Gross profit		661,494		4,253			665,747
Selling, general and administrative expenses		576,055		(9,440	)^b		566,615
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		60,025		25,985			86,010
Other expenses:
Interest expense, net		23,950		0			23,950
Miscellaneous, net		3,719		0			3,719

Income from continuing operations before taxes		32,356		25,985			58,341
Income tax expense		10,326		3,977	^d		14,303

Income from continuing operations net of taxes		22,030		22,008			44,038
Less: Net income attributable to non-controlling interest		5,289		0			5,289

Net income from continuing operations attributable to Harman International Industries, Incorporated	$	16,741	$	22,008		$	38,749

Earnings per share from continuing operations attributable to Harman International Industries, Incorporated:
Basic	$	0.24	$	0.31		$	0.55
Diluted	$	0.24	$	0.31		$	0.55
Weighted average shares outstanding:
Basic		70,300					70,300
Diluted		70,536					70,536

(a)	Restructuring expense in Cost of Sales was $4.3 million due to projects to increase efficiency in manufacturing.

(b)	Restructuring expense in SG&A was $9.4 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 Industries, Incorporated

Reconciliation of GAAP to Non-GAAP Results

Foreign Currency Translation Impact


	Three Months Ended March 31,					Increase (Decrease)
(In thousands; unaudited)	2011		2010			Increase (Decrease)
Net sales – nominal currency	$	948,196	$	837,011			13	%
Effect of foreign currency translation¹				(823	)

Net sales - local currency		948,196		836,188			13	%

Gross profit – nominal currency		248,825		217,632			14	%
Effect of foreign currency translation¹				165

Gross profit – local currency		248,825		217,797			14	%

SG&A & Other – nominal currency		195,178		190,748			2	%
Effect of foreign currency translation¹				(539	)

SG&A & Other – local currency		195,178		190,209			3	%

Operating income – nominal currency		53,647		26,884			100	%
Effect of foreign currency translation¹				704

Operating income – local currency		53,647		27,588			95	%

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.

Harman International Industries, Incorporated

Reconciliation of GAAP to Non-GAAP Results

Foreign Currency Translation Impact


EXCLUDING restructuring and goodwill charges	Three Months Ended March 31,					Increase (Decrease)
(In thousands; unaudited)	2011		2010			Increase (Decrease)
Net sales – nominal currency	$	948,196	$	837,011			13	%
Effect of foreign currency translation¹				(823	)

Net sales – local currency		948,196		836,188			13	%

Gross profit - nominal currency		250,144		218,512			15	%
Effect of foreign currency translation¹				167

Gross profit - local currency		250,144		218,679			14	%

SG&A & Other – nominal currency		186,958		185,712			1	%
Effect of foreign currency translation¹				(594	)

SG&A & Other – local currency		186,958		185,118			1	%

Operating income – nominal currency		63,186		32,800			93	%
Effect of foreign currency translation¹				761

Operating income – local currency		63,186		33,561			88	%

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

Harman International Industries, Incorporated

Reconciliation of GAAP to Non-GAAP Results

Foreign Currency Translation Impact


	Nine Months Ended March 31,					Increase (Decrease)
(In thousands; unaudited)	2011		2010			Increase (Decrease)
Net sales – nominal currency	$	2,741,223	$	2,513,712			9	%
Effect of foreign currency translation¹				(89,081	)

Net sales - local currency		2,741,223		2,424,631			13	%

Gross profit – nominal currency		742,136		661,494			12	%
Effect of foreign currency translation¹				(20,425	)

Gross profit – local currency		742,136		641,069			16	%

SG&A & Other – nominal currency		577,924		601,469			(4	%)
Effect of foreign currency translation¹				(22,017	)

SG&A & Other – local currency		577,924		579,452			0	%

Operating income – nominal currency		164,212		60,025			174	%
Effect of foreign currency translation¹				1,592

Operating income – local currency		164,212		61,617			167	%

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

Harman International Industries, Incorporated

Reconciliation of GAAP to Non-GAAP Results

Foreign Currency Translation Impact


EXCLUDING restructuring and goodwill charges	Nine Months Ended March 31,					Increase (Decrease)
(In thousands; unaudited)	2011		2010			Increase (Decrease)
Net sales – nominal currency	$	2,741,223	$	2,513,712			9	%
Effect of foreign currency translation¹				(89,081	)

Net sales – local currency		2,741,223		2,424,631			13	%

Gross profit - nominal currency		744,507		665,747			12	%
Effect of foreign currency translation¹				(20,721	)

Gross profit - local currency		744,507		645,026			15	%

SG&A & Other – nominal currency		568,580		579,737			(2	%)
Effect of foreign currency translation¹				(21,540	)

SG&A & Other – local currency		568,580		558,197			2	%

Operating income – nominal currency		175,928		86,010			105	%
Effect of foreign currency translation¹				819

Operating income – local currency		175,928		86,829			103	%

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

Harman International Industries, Incorporated

Total Liquidity Reconciliation


Total Company Liquidity	As of March 31, 2011
$ millions	As of March 31, 2011
Cash & cash equivalents	$	427
Short-term investments		341
Available credit under Revolving Credit Facility		543
Total liquidity	$	1,311