-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, MBPwSsuBZyOj8kSk0g/8cOPOc24QklUCRfYe/7FN4RbYtuodO+3CZdp3QKqqoky8 7CDFCriZv/wEFTVQpwB1Eg== 0000800459-94-000008.txt : 19940513 0000800459-94-000008.hdr.sgml : 19940513 ACCESSION NUMBER: 0000800459-94-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940512 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARMAN INTERNATIONAL INDUSTRIES INC /DE/ CENTRAL INDEX KEY: 0000800459 STANDARD INDUSTRIAL CLASSIFICATION: 3651 IRS NUMBER: 112534306 STATE OF INCORPORATION: A1 FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09764 FILM NUMBER: 94527642 BUSINESS ADDRESS: STREET 1: 1101 PENNSYLVANIA AVENUE N W STREET 2: STE 1010 CITY: WASHINGTON STATE: DC ZIP: 20004 BUSINESS PHONE: 2023931101 MAIL ADDRESS: STREET 1: 1101 PENNSYLVANIA AVENUE NW STREET 2: SUITE 1010 CITY: WASHINGTON STATE: DC ZIP: 20004 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended: MARCH 31, 1994 Commission File Number: 1-9764 HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED (Exact name of registrant as specified in its charter) DELAWARE 11-2534306 (State or other jurisdiction of (I.R.S. Employer Identification No.) corporation or organization) 1101 PENNSYLVANIA AVENUE, N.W. WASHINGTON, D.C. 20004 (Address of principal executive offices) (Zip code) (202) 393-1101 (Registrant's telephone number, including area code) NOT APPLICABLE (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ----- ----- Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. 15,062,177 shares of Common Stock, $.01 par value at April 30, 1994. HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES INDEX PART I. FINANCIAL INFORMATION PAGE NO. Item 1. Financial Statements Condensed Consolidated Balance Sheets - March 31, 1994 and June 30, 1993 3 Condensed Consolidated Statements of Operations - Three and Nine Months Ended March 31, 1994 and 1993 4 Condensed Consolidated Statements of Cash Flows - Nine Months Ended March 31, 1994 and 1993 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of the Results of Operations and Financial Condition 7-10 PART II. OTHER INFORMATION 11-12 SIGNATURES 13 EXHIBIT I.1 (Filed as Exhibit 1.2 to the Company's Current Report on Form 8-K/A dated March 17, 1994 (File No. 1-9764) and hereby incorporated by reference.) 14-17 EXHIBIT 10.48 18-21 EXHIBIT 10.49 22-33 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS MARCH 31, 1994 AND JUNE 30, 1993 (000s omitted except per share amounts)
(Unaudited) (Audited) 03/31/94 * 6/30/93 ----------- ---------- ASSETS Current Assets: Cash and short-term investments $ 14,367 $ 2,179 Receivables (less allowance for doubtful accounts: $12,451 at March 31, 1994, and $3,435 at June 30, 1993.) 191,290 127,648 Inventories Finished goods and inventory purchased for resale 130,305 86,681 Work in process 20,403 11,992 Raw materials and supplies 75,756 38,518 ----------- ---------- Total inventories 226,464 137,191 Other current assets 26,936 21,803 ----------- ---------- Total current assets 459,057 288,821 Investments 3,958 -- Investments in unconsolidated subsidiaries 2,507 -- Property, plant and equipment, net 129,461 103,058 Other assets 11,626 9,603 Excess of cost over fair value of assets acquired 33,758 30,244 ----------- ---------- Total assets $ 640,367 $ 431,726 =========== ========== LIABILITIES AND SHAREHOLDER'S EQUITY Current Liabilities: Notes Payable $ 56,276 $ 33,379 Current portion of long-term debt 5,794 4,383 Accounts payable 85,693 54,375 Accrued liabilities 98,763 49,192 ----------- ---------- Total current liabilities 246,526 141,329 Other non-current liabilities 9,232 -- Senior long-term debt 42,010 60,583 Subordinated long-term debt 115,000 115,000 Deferred income 2,695 3,665 Minority interest 7,354 -- Shareholder's Equity: Common stock, $0.01 par value 150 109 Additional paid-in capital 142,710 53,453 Equity adjustment from foreign currency translation (4,022) (5,083) Retained earnings 78,712 62,670 ----------- ---------- Net shareholders' equity 217,550 111,149 ----------- ---------- Total liabilities and shareholders' equity $ 640,367 $ 431,726 =========== ========== * Includes AKG, acquired September 1993, and Studer, acquired March 1994. See accompanying Notes to Condensed Consolidated Financial Statements. 3 HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 1994 AND 1993 (000s omitted except per share amounts) (UNAUDITED)
Three Months Ended Nine Months Ended March 31, March 31, 1994 1993 1994 1993 ---------- ---------- ---------- ---------- Net Sales $ 222,915 $ 167,581 $ 609,302 $ 489,640 Cost of Sales 150,787 118,380 420,025 351,456 ---------- ---------- ---------- ---------- Gross Profit 72,128 49,201 189,277 138,184 Selling, general and administrative expenses53,784 36,420 143,958 110,474 ---------- ---------- ---------- ---------- Operating income 18,344 12,781 45,319 27,710 Other expenses: Interest expense 5,527 5,467 17,459 16,904 Miscellaneous, net (61) 579 639 833 ---------- ---------- ---------- ---------- Income before income taxes and extraordinary items 12,878 6,735 27,221 9,973 Income tax expense 4,699 2,734 10,431 4,001 ---------- ---------- ---------- ---------- Income before extraordinary items 8,179 4,001 16,790 5,972 Extraordinary items, net of income taxes -- -- (748) -- ---------- ---------- ---------- ---------- Net income $ 8,179 $ 4,001 $ 16,042 $ 5,972 ========== ========== ========== ========== Earnings per share of common stock before extraordinary items $ 0.55 $ 0.37 $ 1.30 $ 0.55 ========== ========== ========== ========== Earnings per common share $ 0.55 $ 0.37 $ 1.25 $ 0.55 ========== ========== ========== ========== Weighted average number of common shares outstanding 14,986 10,849 12,812 10,810 ========== ========== ========== ========== See accompanying Notes to Condensed Consolidated Financial Statements. 4 HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED MARCH 31, 1994 AND 1993 ($000s omitted) (UNAUDITED)
1994 1993 ---------- ---------- Cash flows from operating activities: Net income $ 16,042 $ 5,972 ---------- ---------- Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 22,414 17,190 Amortization of intangible assets 1,506 1,371 Amortization of deferred income (970) (970) Changes in assets and liabilities, net of effects from purchase of companies: (Increase) in: Receivables (20,540) (10,166) Inventories (45,890) (8,832) Other current assets (823) (3,148) Increase (decrease) in: Accounts payable 9,202 (3,279) Accrued liabilities 260 3,523 ---------- ---------- Total adjustments $ (34,841) $ (4,311) ---------- ---------- Net cash provided by (used in) operating activities $ (18,799) $ 1,661 Cash flow from investing activities: Payment for purchase of companies, net of cash acquired 8,580 -- Investments in unconsolidated subsidiaries (2,500) -- Capital expenditures for property, plant and equipment (27,444) (16,751) Other items, net 774 2,512 ---------- ---------- Net cash used in investing activities $ (20,590) $ (14,239) ---------- ---------- Cash flow from financing activities: Net repayments of lines of credit (13,775) (20,932) Net proceeds from (repayments of) long-term debt (25,007)43,405 Proceeds from issuance of common stock 87,488 -- Proceeds from exercise of stock options 1,810 467 Net change, foreign currency translation 1,061 (8,346) ---------- ---------- Net cash flow provided by financing activities $ 51,577 $ 14,594 ---------- ---------- Net increase (decrease) in cash and short-term investments 12,188 2,016 Cash and short-term investments at beginning of period 2,179 2,819 ---------- ---------- Cash and short-term investments at end of period $ 14,367 $ 4,835 - ---------------------------------- ========== ========== Supplemental disclosures of cash flow information: Interest paid $ 19,358 $ 18,853 Income taxes paid $ 7,992 $ 2,813 Supplemental schedule of noncash investing activities: Fair value of assets acquired $ 134,144 $ -- Cash paid for the capital stock -- -- ---------- ---------- Liabilities assumed $ 134,144 $ -- ---------- ---------- See accompanying Notes to Condensed Consolidated Financial Statements. 5 HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements NOTE A - BASIS OF PRESENTATION The Company's Condensed Consolidated Financial Statements for the three months and nine months ended March 31, 1994 and 1993 have not been audited by the Company's independent auditors; however, in the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the consolidated financial position of the Company and subsidiaries as of March 31, 1994 and the results of their operations and their cash flows for the periods presented. The results of operations for the three months and nine months ended March 31, 1994 are not necessarily indicative of the results to be expected for the full year. NOTE B - ACQUISITIONS On March 17, 1994, Harman International Industries, Incorporated, through its wholly owned subsidiary Harman Investment Company, Incorporated, acquired from Motor-Columbus AG and its affiliates Studer Revox AG, a leading company in the professional audio field, with particular strength in the recording and broadcast areas. The Studer acquisition was recorded using the purchase method of accounting. Under the terms of the purchase agreement by and among the Company, Harman Investment, Studer and Motor-Columbus, Harman paid 100 Swiss Francs for 100% of the outstanding shares of Studer after Studer had sold certain assets unrelated to the professional audio field to an affiliate of Motor-Columbus. The results of operations for the third quarter ended March 31, 1994 include the results of Studer for January 1, 1994 through March 31, 1994, as the acquisition was made effective January 1, 1994. The inclusion of Studer does not have a material impact on the third quarter consolidated results of the Company. The Consolidated Balance Sheet as of March 31, 1994 includes indebtedness of Studer of $15.8 million, as well as other payment obligations of Studer. Pro forma combined results of operations as if the Studer acquisition had occurred on January 1, 1993 are incorporated by reference from Harman's Current Report on Form 8-K/A filed with the Securities and Exchange Commission on this date, and attached hereto as Exhibit I.1. Pro forma financial data for the nine months ended March 31, 1994 have not been prepared, as it is not practicable to prepare consolidated financial statements for Studer for interim periods in the prior year due to practices in existence for interim reporting at Studer at that time. 6 HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations - --------------------- COMPARISON OF THREE MONTH AND NINE MONTH PERIODS ENDED MARCH 31, 1994 AND 1993 Net sales for the quarter ended March 31, 1993 totaled $222.9 million, a 33 percent increase over the comparable period in the prior year. For the first nine months of fiscal 1994, sales increased 24 percent to $609.3 million. Significant sales increases were reported by the Professional Group, the Automotive OEM Group and the Consumer Group. The International Distributing Group reported lower sales due to the Company's decision to discontinue the distribution of Maxell tapes at Harman Deutschland. Sales of Maxell tape products were $11.8 million and $34.0 million in the prior year's third quarter and first nine months, respectively. The Professional Group sales increase reflects the contributions of AKG, our Austrian microphone manufacturer acquired September 1993, and Studer Revox, acquired in March 1994, the operations of which are included as of January 1, 1994. Strong sales of JBL and Soundcraft products and the inclusion of the sales of Lexicon, which was acquired in the third quarter of the prior fiscal year, also generated increases. Contributing to the growth at Soundcraft was the success of the "Spirit" line of mixing consoles. Higher sales at JBL primarily reflects increased activity in domestic and international markets. Higher Automotive OEM Group sales reflect continued strong sales to the automobile manufacturers. Contributing to the growth were the successful introduction of the Infinity Gold premium audio system in the Jeep Grand Cherokee, the success of the Chrysler LH automobile line in which Chrysler/Infinity ISI systems are installed and increased shipments of Infinity systems to Mitsubishi. Strong sales of the Ford Explorer and Lincoln Town Car, in which the Ford/JBL premium sound systems are installed, also contributed to improved performance. The Consumer Group sales increase results from strong domestic JBL and Infinity sales combined with higher Harman Kardon sales volumes. Sales of the Infinity "Sterling" and "Crescendo" loudspeaker models at Circuit City and the Infinity "SL" loudspeaker line at Best Buys have contributed substantially to our results for the quarter. The International Distributing Group reported lower sales, resulting from the discontinuance of Maxell tape distribution as discussed above. Harman Deutschland is providing administrative support for Maxell, on a fee basis, through the end of fiscal 1994 while continuing to shift its focus to the distribution of products manufactured by the Company. Excluding the Maxell sales, International Distributing Group sales for the quarter and the 7 first nine months of fiscal 1994 approximate the prior year despite the difficult economic conditions in Europe and Japan. The gross profit margin for the quarter ended March 31, 1994 was 32.4 percent compared to 29.4 percent in the prior year. The gross profit margin for the first nine months of fiscal 1994 was 31.1 percent compared to 28.2 percent in the previous year. The increases in gross profit margin reflect the effects of corporate purchasing programs, operating leverage and favorable product mix at Harman Motive and cost reductions at the Manufacturing Group associated with improved manufacturing efficiencies at the Northridge and Audax facilities. Selling, general and administrative expenses as a percentage of net sales increased to 24.1 percent for the quarter ended March 31, 1994 from 21.7 percent in the comparable period in the prior year. Selling, general and administrative expenses for the first nine months of fiscal 1994 were 23.6 percent of sales compared to 22.6 percent in the prior year. The increases for the quarter and the first nine months reflect increased marketing costs associated with the implementation of the Harman Marketing Units, offset by cost savings in overhead personnel due to the new organizational structure of the Company and other cost reduction programs. Operating income as a percentage of sales was 8.2 percent ($18.3 million) for the third quarter ended March 31, 1994 compared with 7.6 percent ($12.8 million) for the same period in the prior year. Operating income as a percentage of sales was 7.4 percent ($45.3 million) for the first nine months of fiscal 1994 compared with 5.7 percent ($27.7 million) in the first nine months of fiscal 1993. These increases reflect improved gross profit percentages for the quarter and the first nine months as discussed above. Interest expense of $5.5 million for the three months ended March 31, 1994 approximated the amount in the comparable period in the prior year despite lower average borrowings, reflecting the impact of higher average interest rates. Average borrowings outstanding were $202.6 million for the third quarter 1994, down from $219.3 million for the third quarter 1993. However, the average interest rate on borrowings was 10.91 percent for the third quarter 1994, up from 10.0 percent for the comparable period in 1993. Interest expense as a percentage of sales was 2.5 percent for the third quarter ended March 31, 1994, down from 3.3 percent for the comparable period in the previous year. For the nine months ended March 31, 1994, interest expense increased to $17.5 million from $16.9 million in the previous year, resulting from higher levels of average borrowings outstanding and higher average interest rates. The average borrowings outstanding were $220.5 million for the first nine months of fiscal 1994 compared to $218.2 million for the first nine months of fiscal 1993. The average interest rate on borrowings was 10.56 percent for the first nine months of fiscal 1994 compared to 10.30 percent for the comparable period in the prior year. Interest expense as a percentage of sales for the first nine months of fiscal 1994 was 2.9 percent compared with 3.5 percent in the first nine months of fiscal 1993. 8 Higher average interest rates for the quarter and the nine months ending March 31, 1994 reflect the repayment of short-term debt, which generally carried lower interest rates than long-term debt, with the proceeds of the common stock offering combined with higher interest rates on the debt assumed in the AKG acquisition and increased interest rates in the United States. Income before income taxes and extraordinary items for the third quarter of fiscal 1994 was $12.9 million, up from $6.7 million in the previous year. For the nine months ended March 31, 1994, income before income taxes and extraordinary items was $27.2 million compared to $10.0 million for the nine months ended March 31, 1993. The effective tax rate for the third quarter of fiscal 1994 was 36.5 percent compared with 40.6 percent in the prior year. The effective tax rate for the first nine months of fiscal 1994 was 38.3 percent compared to a rate of 40.1 percent in the prior year. The Company calculates its taxes based upon its best estimate of annual results. The Company reported an extraordinary charge, net of a related tax benefit, of $748,000 in the second quarter of fiscal 1994 associated with the extinguishment of $25.0 million of debt through an in-substance defeasance of the 10.08% $25.0 million Senior Notes, Series A, due September 30, 1994. Net income for the three months ended March 31, 1994 was $8.2 million, or $0.55 per share, compared with $4.0 million, or $0.37 per share, in the previous year. Net income for the first nine months of fiscal 1994 was $16.0 million, or $1.25 per share, compared with $6.0 million, or $0.55 per share, in the previous year. Financial Condition - ------------------- Net working capital at March 31, 1994 was $212.5 million, compared with $147.5 million at June 30, 1993. The increase primarily reflects the repayment of short-term borrowings with the proceeds of the second quarter common stock issuance combined with higher inventories and receivables associated with the AKG and Studer acquisitions and increased sales volumes. The Company issued 4,025,000 shares of common stock in November 1993, which included full utilization of the over-allotment option for 525,000 shares. The stock was issued at $23.00 per share, generating net proceeds to the Company of $87.5 million after underwriting discount and associated expenses. The proceeds were used primarily to repay short- and long-term debt. Other changes in the Company's balance sheet from June 30, 1993, the end of the preceding fiscal year, to March 31, 1994 are as follows: 9 - - Accounts receivable increased by $63.7 million from $127.6 million at June 30, 1993 to $191.3 million at March 31, 1994. Of this increase, $22.0 million was due to the inclusion of AKG, $13.9 million reflects the inclusion of Studer, and the remaining increase results from the impact of higher sales volume. - - Inventories increased by $89.3 million from $137.2 million to $226.5 million. Of this increase, $23.3 million is due to the inclusion of AKG inventories, $24.8 reflects the inclusion of Studer inventories, and the remainder primarily results from the requirement for increased inventories to support higher sales volumes. Other - ----- Although the Company's Northridge plant was near the epicenter of the California earthquake, the manufacturing facility did not sustain significant structural damage and is again fully operational. Management believes the Company's insurance coverage is adequate to cover anticipated losses, and the impact of the earthquake will not be material to the financial condition of the Company. 10 HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES PART II - OTHER INFORMATION Item 1. Legal Proceedings There are various legal proceedings pending against the registrant and its subsidiaries but, in the opinion of management, liabilities, if any, arising from such claims will not have a materially adverse effect upon the consolidated financial condition of the registrant. Item 2. Changes in Securities None. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders None. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Required by Item 601 of Regulation S-K The following exhibits are filed as part of this report. Exhibit No. Description ------- ----------- I.1 Pro forma combined results of operations for the Company and Studer for the year ended December 31, 1993 to give effect to the Studer Acquisition as though it occurred on January 1, 1993. 10.48 Form of Severance Agreement by and between the Company and Richard James. 10.49 Form of Non-qualified Stock Option Agreement under the 1992 Executive Incentive Plan to include Incentive Pricing. 11 HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED PART II - OTHER INFORMATION (continued) Item 6. Exhibits and Reports on Form 8-K (continued) (b) Reports on Form 8-K Form 8-K, dated March 17, 1994, filed on March 31, 1994, containing the following items: Item 2. Description of the acquisition of Studer Revox AG. 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED (Registrant) DATE: May 12, 1994 BY: /s/ Sidney Harman ---------------------- Sidney Harman Chairman and Chief Executive Officer DATE: May 12, 1994 BY: /s/ Bernard A. Girod ---------------------- Bernard A. Girod President, Chief Operating Officer, Chief Financial Officer and Secretary 13
EX-99 2 EXHIBIT I.1 EXHIBIT I.1 14 Pro forma Consolidated Financial Data The following table presents consolidated statements of operations for the Company and Studer Revox AG for the twelve months ended December 31, 1993 and also includes pro forma consolidated statements for the same period to give effect to the Studer acquisition as though it occurred on January 1, 1993. The statement of operations data for Harman International has been derived from quarterly unaudited consolidated financial statements of the Company and its subsidiaries. The pro forma financial data presented does not purport to represent what the Company's results of operations would have been had such transactions occurred at the beginning of the period presented or to project the Company's results of operations for any future period. 15 Twelve Months Ended December 31, 1993 ----------------------------------------------------- (000 except per Studer share data) Studer Adjustments(1) Adjusted Harman Pro forma ----------------------------------------------------- Statements of Operations: Net sales $91,176 (16,218) (2) 74,958 729,241 804,199 Cost of sales 56,504 (17,609) (2,5,7) 38,895 510,512 549,407 ---------------------------------------------------- Gross profit 34,672 1,391 36,063 218,729 254,792 Operating expenses 53,613 (19,203) (2,3,6) 34,410 165,428 199,838 ---------------------------------------------------- Operating income (loss) (18,941) 20,594 1,653 53,301 54,954 Interest expense 5,978 (4,729) (2,3,4) 1,249 24,061 25,310 Miscellaneous, net 1,818 81 (2) 1,899 (435) 1,464 ---------------------------------------------------- Income (loss) before taxes (26,737) 25,242 (1,495) 29,675 28,180 Income taxes (1,410) (35) (2) (1,445) 11,789 10,344 ---------------------------------------------------- Net income (loss) before extraordinary items and minority interest (25,327) 25,277 (50) 17,886 17,836 ---------------------------------------------------- Extraordinary items -- -- -- (748) (748) ---------------------------------------------------- Net income (loss) before minority interest (25,327) 25,277 (50) 17,138 17,088 Minority interest (37) -- (37) -- (37) ---------------------------------------------------- Net Income (Loss) $(25,364) 25,277 (87) 17,138 17,051 ==================================================== Net income per share before extraordinary items and minority interest $1.59 $1.58 ======= ====== Net income per share $1.52 $1.51 ======= ====== Shares Outstanding 11,274 11,274 16 Notes to Pro Forma Consolidated Financial Data (1) Pro forma statements of operations adjustments are based upon preliminary estimates by the Company. The actual amount of these adjustments may vary from these estimates, and will not be determined until the Company completes its review of Studer's business and valuation of assets and liabilities. The Company believes that the actual amount of these adjustments, in the aggregate, will not vary materially from these estimates. Swiss Francs were converted to U.S. dollars based on the average exchange rate for the period. (2) Reflects the elimination of the Revox Consumer Electronics Divisions which were not purchased by the Company, thus eliminating sales of $16,218,000, cost of sales of $10,145,000, operating expenses of $14,153,000, interest and miscellaneous costs of $2,089,000 and income taxes of $35,000. (3) Represents the elimination of interest costs of approximately $1,600,000 and depreciation of approximately $1,490,000, real estate taxes of approximately $914,000 and real estate agents' fees of approximately $233,000 on buildings not purchased by the Company. The Company has leased from the seller a portion of the buildings previously owned rent-free for a period of three years. (4) Reflects interest expense of approximately $947,000 no longer required as a result of a capital contribution by the Seller of SFR 17,000,000 or about $11,800,000. (5) Reflects the elimination of payroll costs for the year 1993 of approximately $5,800,000 due to the termination of 120 employees in December 1993. (6) Reflects the elimination of management fees of approximately $866,000 which were paid by Studer Revox AG to the Seller in 1993. (7) Reflects the elimination of non-recurring expenses which were incurred by Studer Revox AG in 1993, including termination pay of approximately $1,650,000, non-trading losses in the Vienna operation of approximately $1,590,000 and other costs of approximately $225,000. 17 EX-10 3 EXHIBIT 10.48 EXHIBIT 10.48 18 SETTLEMENT AND RELEASE AGREEMENT Richard James and Harman International, Inc. have reached the following Agreement in connection with Employee's separation from the Company. In this Agreement, Richard James is referred to as "Employee" and Harman International, Inc. is referred to as "the Company." 1. Payment. The Company agrees to give Employee a lump sum payment of $10,000.00. The Company will deduct from this amount federal and state withholding taxes and other deductions the Company is required by law to make from wage payments to employees. Employee acknowledges that there are no other sums payable to him by the Company, whether characterized as wages, commissions, reimbursements, bonuses, separation pay, termination pay, vacation pay, pensions, insurance coverage, or otherwise. 2. Payment Not Normally Available. Employee acknowledges that the $10,000.00 payment is provided to him solely in exchange for the promises in this Agreement, are not normally available under Company policy or practice to employees whose employment is terminated, and are in an amount to which he would not otherwise be entitled by virtue of any contract, Company policy or practice, or any federal, state or local statute, ordinance, order, or law. 3. Complete Release by Employee. For and on behalf of himself, his agents, heirs, executors, administrators, and assigns, Employee hereby releases and forever discharges the Company and all of its successors and assigns, and all of its and their respective agents, directors, officers, partners, employees, representatives, insurers, attorneys, and joint ventures, and each of them, from any and all claims which are based upon acts or events that occurred on or before the date on which this Agreement becomes enforceable, including any claim arising under any state or federal statute or common law, including, but not limited to, the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. section 623, and the California Fair Employment and Housing Act, Cal. Gov't Code sections 12940, et seq. 4. Complete Release by Company. For itself and for its successors and assigns, the Company hereby releases and forever discharges Employee, his agents, heirs, executors, administrators, and assigns, and each of them, from any and all claims which are based upon acts or events that occurred on or before the date on which this Agreement becomes enforceable, including any claim arising under any state or federal statute or common law. 5. Release of Unknown Claims. Employee and Company are familiar with Section 1542 of the California Civil Code, which reads as follows: A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time or executing the release, which if known by him must have materially affected his settlement with the debtor. 19 Employee and the Company are releasing unknown claims and waive all rights they have or may have under Civil Code Section 1542 or under any other statute or common law principle of similar effect. However, neither party is waiving any rights or claims that may arise out of acts or events that occur after the date on which this Agreement becomes enforceable. 6. Additional Facts. Both parties acknowledge that they may hereafter discover facts different from, or in addition to, those they now believe to be true with respect to any or all of the claims or demands herein released. Nevertheless, Employee and the Company agree that the releases set forth above shall be and remain effective in all respects, notwithstanding the discovery of such different or additional facts. 7. No Future Lawsuits. Employee and the Company promise never to file any lawsuit asserting any claim that is released in paragraphs 3, 4, and/or 5, above. If either party files any such lawsuit, that party will pay for all costs incurred by the other party (or by others released by the party who filed the lawsuit), including reasonable attorneys' fees, in defending against the claims made in the lawsuit. 8. Confidential Business Information. While employed by the Company, Employee has had access to confidential business information and business ideas belonging to the Company. Employee will not communicate or disclose any such information or idea to any person or entity at any time in the future unless required or asked to do so by an officer of the Company. Further, Employee represents and agrees that Employee will not now or in the future disrupt, damage, impair or interfere with the business of Harman; nor shall Employee communicate as to disparage, malign, cast dispersions on, or discredit Harman. Harman agrees that it will not now or in the future disparage, malign, cast dispersions on or discredit Employee. 9. Non-Admission of Wrongdoing. By making this Agreement, neither Employee nor the Company admits to having engaged in any wrongdoing. 10. Further Action by Employee. For a period not to exceed six months from the date of this Agreement, Employee will comply with reasonable requests to execute Company documents pending when his employment was terminated and otherwise reasonably to cooperate in the orderly transfer of his responsibilities. 11. Period for Review and Consideration of Agreement. Employee has 21 days to consider whether or not to sign this Release and has been advised in writing to consult with an attorney prior to signing it. 12. Employee's Right to Revoke Agreement. Employee may revoke this Agreement at any time on or before the date which is seven (7) calendar days after the date of his signature on this Agreement. The Agreement will be effective and enforceable upon the expiration of the seven-day revocation period. 20 13. Voluntary Execution. Employee and the Company have read this Agreement and understand all of its terms. They execute it voluntarily and with full knowledge of its significance. 14. Entire Agreement. This is the entire agreement between Employee and the Company. There are no written or oral understandings, promises or agreements directly or indirectly related to this Agreement that are not incorporated into this Agreement in full. This Agreement supersedes any and all prior agreements or understandings between the parties, including, but not limited to, any and all employment agreements, express or implied. PLEASE READ CAREFULLY BEFORE SIGNING. THIS AGREEMENT CONTAINS A GENERAL RELEASE AND WAIVER OF ALL KNOWN AND UNKNOWN CLAIMS. 3-10-94 _________________ HARMAN INTERNATIONAL, INC. Date Signed By: /s/ Sidney Harman ___________________________ Its: Chairman and Chief Executive Officer 3-10-94 /s/ Richard James _________________ _____________________________ Date Signed Richard James 21 EX-10 4 EXHIBIT 10.47 EXHIBIT 10.49 22 HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED NON-QUALIFIED STOCK OPTION AGREEMENT THIS NON-QUALIFIED STOCK OPTION AGREEMENT (the "Agreement") dated as of ________________, by and between HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED, a Delaware Corporation (the "Company"), and _________________ (the "Optionee"): W I T N E S S E T H: WHEREAS, the Optionee is an employee of the Company or a Subsidiary of the Company; and WHEREAS, the execution of a non-qualified stock option agreement in the form hereof has been duly authorized by a resolution of the Compensation and Option Committee (the "Committee") of the Board of Directors (the "Board) of the Company duly adopted on ________________ (the "Date of Grant"); NOW, THEREFORE, in consideration of these premises and the covenants and agreements set forth in this Agreement, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Optionee agree as follows: 1. Grant of Option. Pursuant to the terms and conditions of the Harman International Industries, Incorporated 1992 Incentive Plan (the "Plan"), the Company hereby grants to the Optionee an option (the "Option") to purchase _______ shares (the "Option Shares") of the Company's Common Stock, par value $0.01 per share ("Common Stock"), at the following prices (the "Option Prices") which are at a premium over the $______ per share closing price of the Common Stock on the Date of Grant: Number of Option Shares Price --------- ------ 2. Type of Option. This Option is intended to be a non-qualified stock option and shall not be treated as an "incentive stock option" within the meaning of that term under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). 3. Vesting of Option. Unless and until terminated as hereinafter provided, the Option shall become immediately and fully exercisable. 4. Manner of Exercise. (a) The Option may be exercised by the Optionee at any time, or from time to time, in whole or in part, during the term thereof, but only in multiples of fifty (50) shares. (b) The Optionee shall exercise the Option by delivering a signed written notice to the Company, which notice shall specify the number of Option Shares to be purchased and the Option Prices thereof and be accompanied by payment in full of the applicable Option Price for the number of Option Shares specified for purchase. 23 (c) The Option Price shall be payable (i) in cash or by check acceptable to the Company, (ii) by transfer to the Company of Common Stock that has been owned by the Optionee for more than six months prior to the date of exercise, or (iii) by a combination of any of the foregoing methods of payment. 5. Repurchase Right. (a) Shares acquired on exercise may be repurchased by the Company (or if the Options shall remain unexercised, in whole or in part, the Option or a portion thereof may be canceled), in the sole discretion of the Committee, at any time during the period commencing ____________ and ending ________________ at the Option Price paid for the Option Shares to be repurchased, subject to the conditions and to the extent specified in this Section 5. For the purpose of this Agreement, the Company's right to repurchase shares acquired under this Option and right to cancel the Option shall be referred to collectively as the "Right to Repurchase." (b) The Right to Repurchase will lapse to the extent of one- seventh of the total number of Option Shares if, during or with respect to any fiscal year commencing with the fiscal year ending _____________, the requirements of Alternative I or Alternative II are met. (i) Alternative I. The requirements of Alternative I may be met in a fiscal year if, during such fiscal year, the Company's stock price per share equals or exceeds the applicable target stock price level set forth in the following table: Percent of Option Shares Subject to Repurchase Target Level of After Attainment of Period Stock Price Per Share Target Stock Price Level ------ --------------------- ------------------------ The target stock price level will be deemed to have been attained, for purposes of this Alternative I, only if the closing price of the Company's Common Stock (on the composite tape of The New York Stock Exchange - Listed Securities) equals or exceeds the applicable target stock price level on 30 trading days out of any consecutive 60 trading day period. (ii) Alternative II. The requirements of Alternative II may be met with respect to a fiscal year if earnings per share (fully diluted) before adjustment for extraordinary events including acquisitions and dispositions ("EPS") reported for such fiscal year equals or exceeds the applicable target EPS set forth in the following table: 24 Percent of Option Shares Subject to Repurchase After Period Target EPS Level Attainment of Target ------ ---------------- -------------------- (c) Other provisions of this Section 5 notwithstanding, the Right to Repurchase shall lapse if cumulative EPS for the five fiscal years ending _____________ equals or exceeds _____ times EPS for ________________ (which represents a cumulative compound growth rate target of ___ per annum). (d) The Committee may, in its sole discretion, adjust the applicable target stock prices in subsection 5 (b) (i) or the applicable target EPS in subsection 5 (b) (ii) if events or transactions have occurred after the Date of Grant which are unrelated to the performance of the Optionee and result in a distortion of the target stock price or target EPS in an applicable fiscal year. (e) In the event of Optionee's death, disability, retirement approved by the Committee or other termination of employment deemed by the Committee to be in the best interests of the Company, the Right to Repurchase will lapse. For the purpose of this Section 5, disability shall be defined to mean the absence of the Optionee from his duties with the Company on a full-time basis for one hundred eighty (180) days within any period of three hundred and sixty five (365) consecutive days as a result of his incapacity due to physical or mental illness as confirmed by a physician acceptable to the Company. (f) Option Shares shall not be transferable at any time prior to such time as the Right to Repurchase has lapsed with respect to such Option Shares. 25 (g) As the Right to Repurchase lapses in accordance with Section 5(b) above, it shall lapse in ascending order of Option Price with the Right to Repurchase lapsing on those shares that have been or may be acquired by exercise of Options with the lowest Option Price. Except to the extent the Right to Repurchase has lapsed with respect to specific Option Shares, shares repurchased by Committee will be repurchased in ascending order of Option Price; provided, however, if any such Options have not been exercised, the Committee shall cancel such unexercised Options starting with the outstanding Options with the lowest Option Price. (h) Notwithstanding the other provisions of this Section 5, the Right to Repurchase shall lapse in its entirety upon the occurrence of a change in control of the Company, unless such change in control is caused by or within the control of the Optionee. A change in control of the Company will be deemed to have occurred if the individuals who constitute the Board at the beginning of any period of two consecutive years cease to constitute a majority of the members thereof. For this purpose, no change will be deemed to have occurred in the composition of the Board by reason of the appointment or election of any director to fill a vacancy created by (i) the death or disability of a director or (ii) the resignation or removal of a director or an increase in the size of the Board, if such resignation or removal or increase in the size of the Board is unrelated to a merger or consolidation of the Company with another corporation, an acquisition of a majority of the voting shares of the Company's stock or a sale by the Company of substantially all of its assets. In each of the cases described in clauses (i) and (ii) of the preceding sentence, the director who is appointed or elected to fill the 26 vacancy will be treated as a director serving on the Board at the beginning of the two-year period. 6. Termination. (a) The Option shall terminate on the earliest of the following dates: (i) The date written notice is given by the Optionee or by the Company or Subsidiary terminating Optionee's employment for any reason other than retirement, death or permanent disability; provided, however, that the Committee may, in its sole discretion, determine it is equitable under the circumstances or in the best interests of the Company to allow Optionee up to 90 days from the date of termination to exercise the Option; provided further that for purposes of this Agreement, the Optionee shall not be deemed to have terminated such employment by reason of (1) the transfer of employment among the Company and its Subsidiaries or (2) a leave of absence approved by the Board. (ii) One year after the retirement of the Optionee. (iii) One year after the death or permanent disability of the Optionee, if the Optionee dies or becomes permanently disabled while an employee of the Company or a Subsidiary; (iv) Committee cancellation resulting from exercise of the Right to Repurchase. (v) Ten years after the Date of Grant. (b) In the event that the Optionee commits an act that the Committee determines to have been intentionally committed and materially inimical to the interests of the Company, the Option shall terminate as of the time of the commission of that act, notwithstanding any other provision of this Agreement. 27 7. Share Certificates. The Company hereby agrees to cause certificates for the Option Shares purchased hereunder to be delivered to the Optionee upon (i) full payment of the applicable Option Price, subject to the applicable terms and conditions of the Plan and (ii) subject to the terms and conditions set forth herein (including the lapse of the Company's repurchase right set forth in Section 5 hereof). All certificates evidencing Option Shares purchased pursuant hereto (and any certificates for Common Stock attributable to the shares acquired by exercise of the Option which, in the opinion of counsel for the Company, are subject to similar legal requirements) shall have endorsed thereon before issuance such legends as the Company's counsel may deem necessary or advisable. In furtherance thereof, until such time as the Right to Repurchase shall have lapsed, the certificates representing such shares shall bear a legend to evidence the Right to Repurchase and the related restriction on transferability, and such certificates shall remain in the custody of the Company. Optionee agrees to execute and deliver blank stock powers to the Company at the time of exercise of the Option to authorize transfer of Option Shares that may be repurchased by the Company pursuant to the Right to Repurchase. In the event that the issuance of Option Shares upon exercise constitutes a transaction not involving a public offering, the Company and any transfer agent shall not be required thereafter to transfer any such shares unless and until the Company or its transfer agent shall have received from counsel to the Company, in a form satisfactory to the Company, an opinion that any such transfer will not be in violation of any applicable law or regulation. Optionee agrees not to sell, assign, pledge or otherwise dispose of any shares without the Company first receiving such an opinion. 28 8. Tax Reimbursement by Optionee. As a condition of this grant, Optionee agrees that, if and to the extent that any exercise of the Option or subsequent lapse of the Right to Repurchase would result in the Company not being permitted to deduct for tax purposes under Section 162(m) of the Code (or any successor provision), remuneration equal to the amount of remuneration received by Optionee, Optionee will reimburse the Company in an amount equal to (i) the amount of the tax benefit that would have resulted to the Company had the deductibility of remuneration resulting from such exercise or subsequent lapse not been subject to the limitation under Section 162(m) (or any successor provision), plus (ii) the amount of taxes payable by the Company as a result of all reimbursements under (i) and (ii) hereof. All determinations relating to this provision shall be made by the Company's independent certified public accountants. Optionee acknowledges that the Option may not qualify as "performance-based compensation" within the meaning of Section 162(m) of the Code. 9. Transfer. The Option may not be transferred except by will or the laws of descent and distribution and may not be exercised during the lifetime of the Optionee except by the Optionee or the Optionee's guardian or legal representative acting on behalf of the Optionee in a fiduciary capacity under state law and court supervision. 10. Compliance with Law. The Company shall make reasonable efforts to comply with all applicable federal and state securities laws and regulations; provided, however, that notwithstanding any other provision of this Agreement, the Company will have no obligation to deliver shares upon exercise if such exercise or delivery would involve a violation of any such laws and regulations. 29 11. Adjustments. (a) The Committee may make such adjustments in the Option Price per share, the target attainment levels for stock price per share and EPS, and the numbers and kind of shares of stock or other securities covered by this Agreement as the Committee may in good faith determine to be equitably required in order to prevent any dilution or expansion of the Optionee's rights under this Agreement that otherwise would result from any: (i) stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company; (ii) merger, consolidation, spin-off, reorganization, partial or complete liquidation or issuance of rights or warrants to purchase securities of the Company; or (iii) other corporate transaction or event having an effect similar to any of the foregoing. (b) In the event that any transaction or event described or referred to in Section 11(a) above shall occur, the Committee may provide in substitution of any or all of the Optionee's rights under this Agreement such alternative consideration as the Committee may in good faith determine to be equitable under the circumstances. 12. Fractional Shares. The Company shall not be required to issue any fractional share of Common Stock pursuant to the Option. The Committee may provide for the elimination of fractions or for the settlement of fractions in cash. 13. Withholding Taxes. If the Company shall be required to withhold any federal, state, local or foreign tax in connection with the exercise of the Option, it shall be a condition of the exercise of the 30 Option that Optionee pay to the Company the balance of such tax required to be withheld or make provisions that are satisfactory to the Company for the payment thereof. The Optionee may elect to have the Company withhold Option Shares to satisfy tax withholding obligations only if such shares are not subject to the Company's right of repurchase. 14. Right to Terminate Employment. No provision of this Agreement shall limit in any way whatsoever any right that the Company or a Subsidiary may otherwise have to terminate the employment of the Optionee at any time. 15. Definition of a Subsidiary. For the purposes of this Agreement, the term "Subsidiary" means any corporation in which the Company directly or indirectly owns or controls more than 50 percent of the total combined voting power of all classes of stock issued by the corporation. 16. Communications. All notices, demands and other communications required or permitted hereunder or designated to be given with respect to the rights or interests covered by the Agreement shall be deemed to have been properly given or delivered when delivered personally or sent by certified or registered mail, return receipt requested, U.S. mail or reputable overnight carrier with full postage prepaid and addressed to the parties as follows: If to the Company, at: 1101 Pennsylvania Avenue, N.W. Suite 1010 Washington, DC 20004 Attention: Vice President - Financial Operations If to the Optionee: Optionee's address provided by Optionee on the last page hereof Either the Company or Optionee may change the above designated address by written notice to the other specifying which new address. 31 17. Interpretation. The interpretation and construction by the Committee of the Agreement shall be final and conclusive. No member of the Committee shall be liable for any such action or determination made in good faith. 18. Amendment in Writing. In accordance with its terms, this Agreement may be amended, but only in writing which specifically references this Section and is signed by each of the parties hereto. 19. Integration. The Option is granted pursuant to the Plan, and this Agreement and the Option are subject to all of the terms and conditions of the Plan, a copy of which is attached hereto and incorporated herein by reference. As such, this Agreement embodies the entire agreement and understanding of the parties hereto with respect to the Option, and supersedes any prior understandings or agreements, whether written or oral, with respect to the Option. 20. Severance. In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof and the remaining provisions hereof shall continue to be valid and fully enforceable. 21. Governing Law. This Agreement is made under, and shall be construed in accordance with, the laws of the District of Columbia and applicable provisions of the Delaware General Corporation law and applicable Federal law. 22. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. 32 IN WITNESS WHEREOF, this Agreement is executed by the Company on the day and year first above written. HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED By: ___________________ Name: ________________ The undersigned Optionee hereby acknowledges receipt of an executed original of this Non-Qualified Stock Option Agreement and accepts the Option subject to the applicable terms and conditions of the Plan and the terms and conditions hereinabove set forth. Optionee: _________________ OPTIONEE: Please complete/update the following information. Name: _____________ Home Address: ___________________________ ___________________________ Employee Number: ___________ Date of Hire: ______ Company or Division: _____________________________________ 33 -----END PRIVACY-ENHANCED MESSAGE-----