-----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, YI1y36KduS0/6Ln0PNEgCGUSLUPo7pi7Y8bckyWjeARHFmnwVEq4YJPRg3e8FcqC 0L2Um4A5yFd9sA8p5xNw8A== 0000800459-95-000001.txt : 19950517 0000800459-95-000001.hdr.sgml : 19950517 ACCESSION NUMBER: 0000800459-95-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950208 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: 95506193 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: DECEMBER 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. 15,126,767 shares of Common Stock, $.01 par value at January 31, 1994. HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES INDEX PART I. FINANCIAL INFORMATION PAGE NO. Item 1. Financial Statements Condensed Consolidated Balance Sheets - December 31, 1994 and June 30, 1994 3 Condensed Consolidated Statements of Operations - Three and Six Months Ended December 31, 1994 and 1993 4 Condensed Consolidated Statements of Cash Flows - Six Months Ended December 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 SIGNATURES 12 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1994 AND JUNE 30, 1994 (000s omitted except per share amounts)
(Unaudited) (Audited) 12/31/94 6/30/94 ----------- ---------- ASSETS Current Assets: Cash and short-term investments $ 14,763 $ 9,724 Receivables (less allowance for doubtful accounts: $11,260 at December 31, 1994, and $10,241 at June 30, 1994) 210,206 206,801 Inventories Finished goods and inventory purchased for resale 149,935 151,426 Work in process 19,131 20,200 Raw materials and supplies 55,034 66,469 ----------- ---------- Total inventories 224,100 238,095 Other current assets 50,245 35,202 ----------- ---------- Total current assets 499,314 489,822 Investments 3,282 4,139 Investments in unconsolidated subsidiaries 2,679 2,675 Property, plant and equipment, net 141,793 138,555 Other assets 11,232 11,140 Excess of cost over fair value of assets acquired, net 40,270 34,360 ----------- ---------- Total assets $ 698,570 $ 680,691 =========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Notes payable / swing lines $ 20,382 $ 63,140 Current portion of long-term debt 4,804 6,114 Accounts payable 69,723 91,516 Accrued liabilities 108,657 113,174 ----------- ---------- Total current liabilities 203,566 273,944 Other non-current liabilities 10,623 8,514 Borrowings under Revolving Credit Facility 80,716 -- Senior long-term debt 39,442 41,577 Subordinated long-term debt 109,500 115,000 Deferred income 1,739 2,372 Minority interest 5,660 7,263 Shareholders' Equity: Common stock, $0.01 par value 151 151 Additional paid-in capital 143,736 143,144 Equity adjustment from foreign currency translation 216 392 Retained earnings 103,221 88,334 ----------- ---------- Net shareholders' equity 247,324 232,021 ----------- ---------- Total liabilities and shareholders' equity $ 698,570 $ 680,691 =========== ==========
See accompanying Notes to Condensed Consolidated Financial Statements. 3 HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 1994 AND 1993 (000s omitted except per share amounts) (UNAUDITED)
Three Months Ended Six Months Ended December 31, December 31, 1994 1993 1994 1993 ---------- ---------- -------------------- Net Sales $ 288,718 $ 222,726 $ 517,325 $ 386,387 Cost of Sales 197,881 152,369 350,622 269,238 ---------- ---------- -------------------- Gross Profit 90,837 70,357 166,703 117,149 Selling, general and administrative expenses 66,021 50,947 127,728 90,174 ---------- ---------- -------------------- Operating income 24,816 19,410 38,975 26,975 Other expenses: Interest expense 6,173 6,347 11,909 11,932 Miscellaneous, net 93 461 1,411 700 ---------- ---------- -------------------- Income before income taxes, minority interest and extraordinary items 18,550 12,602 25,655 14,343 Income tax expense 6,336 5,035 9,166 5,732 Minority interest 44 -- 121 -- ---------- ---------- -------------------- Income before extraordinary items 12,170 7,567 16,368 8,611 Extraordinary items, net of income taxes (226) (748) (274) (748) ---------- ---------- -------------------- Net income $ 11,944 $ 6,819 $ 16,094 $ 7,863 ========== ========== ==================== Earnings per share of common stock before extraordinary items $ 0.80 $ 0.59 $ 1.08 $ 0.72 ========== ========== ==================== Earnings per common share$ 0.79 $ 0.54 $ 1.07 $ 0.67 ========== ========== ==================== Weighted average number of common shares outstanding 15,103 12,617 15,089 11,748 ========== ========== ==================== See accompanying Notes to Condensed Consolidated Financial Statements.
4 HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED DECEMBER 31, 1994 AND 1993 ($000s omitted) (UNAUDITED)
1994 1993 ---------- ---------- Cash flows from operating activities: Net income $ 16,094 $ 7,863 ---------- ---------- Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 18,647 14,357 Amortization of intangible assets 1,241 998 Amortization of deferred income (647) (646) Changes in assets and liabilities, net of effects from purchase of companies: (Increase) decrease in: Receivables (3,405) (8,839) Inventories 13,995 (25,739) Other current assets (15,043) (103) Increase (decrease) in: Accounts payable (21,830) 641 Accrued liabilities (4,563) 810 ---------- ---------- Total adjustments $ (11,605) $ (18,521) ---------- ---------- Net cash provided by (used in) operating activities $ 4,489 $ (10,658) Cash flow from investing activities: Payment for purchase of companies, net of cash acquired (3,990) 2,568 Investments in unconsolidated subsidiaries -- (2,500) Capital expenditures for property, plant and equipment (21,539) (17,155) Other items, net (2,143) 2,124 ---------- ---------- Net cash used in investing activities $ (27,672) $ (14,963) ---------- ---------- Cash flow from financing activities: Net borrowings under (repayments of) lines of credit (42,758) (20,503) Net proceeds from (repayments of) long-term debt 71,771 (24,288) Proceeds from issuance of common stock -- 87,488 Dividends paid to stockholders (1,207) -- Proceeds from exercise of stock options 592 681 Net change, foreign currency translation (176) (1,908) ---------- ---------- Net cash flow provided by financing activities $ 28,222 $ 41,470 ---------- ---------- Net increase in cash and short-term investments 5,039 15,849 Cash and short-term investments at beginning of period 9,724 2,179 ---------- ---------- Cash and short-term investments at end of period $ 14,763 $ 18,028 - - - ---------------------------------- ========== ========== Supplemental disclosures of cash flow information: Interest paid $ 11,322 $ 11,696 Income taxes paid $ 12,519 $ 2,025 Supplemental schedule of noncash investing activities: Fair value of assets acquired $ 2,493 $ 70,149 Cash paid for the capital stock 422 -- ---------- ---------- Liabilities assumed $ 2,071 $ 70,149 ---------- ---------- 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 six months ended December 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 December 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 six months ended December 31, 1994 are not necessarily indicative of the results to be expected for the full year. 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 SIX MONTH PERIODS ENDED DECEMBER 31, 1994 AND 1993 Net sales for the quarter ended December 31, 1994 totaled $288.7 million, a 29.6 percent increase over the comparable period in the prior year. For the first half of the year, sales increased 33.9% to $517.3 million. The quarter and the first half were highlighted by the performance of the Professional Group. Significant sales increases were also reported by the Consumer Group and the Automotive OEM Group. The Professional Group produced good sales and earnings results for the quarter and the first half. Professional sales for the first six months included Studer and AKG. Studer was not part of the Company in the first half a year ago, and AKG contributed in the second quarter only. Soundcraft generated strong growth in sales and earnings for the quarter and the first half, and DOD contributed vigorously as it continued an impressive turnaround from last year's performance. The Consumer Group contributed higher sales and operating results compared to the prior year. Infinity and JBL were impressive contributors as new products led to substantial increases in sales and operating results over the same period a year ago. Higher Automotive OEM Group sales resulted from continued strong sales to the automobile manufacturers. New clients including Saab, Jaguar and Range Rover now offer Harman Kardon high fidelity systems. Advanced new Infinity systems are available in the Eagle Talon and the Mitsubishi Eclipse and Galant. A new Ford/JBL system is offered in the Ford Windstar minivan and in the newly redesigned Ford Explorer. A high-end audio system was introduced in the new Toyota Avalon. Continued brisk sales of the Jeep Grand Cherokee, which offers the Infinity Gold audio system, also contributed to the Group's strong results. The gross profit margin for the quarter ended December 31, 1994 was 31.5 percent ($90.8 million) compared to 31.6 percent ($70.4 million) in the prior year. The gross profit margin for the first half of fiscal 1995 was 32.2 percent ($166.7 million) compared to 30.3 percent ($117.1 million) in the previous year. The gross profit margin percentage for the first half increased due to higher margin contribution from the Professional Group, primarily reflecting gains at AKG and DOD, and the favorable effects of operating leverage and product mix at the Automotive OEM Group. The gross profit margin for the quarter approximated the prior year, reflecting higher margin contribution from the Professional Group and the Automotive OEM Group offset by the impact of lower 7 manufacturing throughput associated with inventory reduction programs which were implemented in September 1994. Selling, general and administrative expenses represented 22.9 percent of net sales for the quarter ended December 31, 1994, equal to the comparable period in the prior year. Selling, general and administrative expenses for the first half of fiscal 1995 were 24.7 percent of sales compared to 23.3 percent in the prior year. The increase for the first half primarily resulted from costs associated with new advertising and marketing programs intended to increase awareness of the Company's brands. Operating income as a percentage of sales was 8.6 percent ($24.8 million) for the second quarter ended December 31, 1994 compared with 8.7 percent ($19.4 million) for the same period in the prior year. For the first half, operating income as a percentage of sales increased to 7.5 percent from 7.0 percent reported in the previous year. The increase for the first half reflects improved gross profit percentages as discussed above. Interest expense for the three months ended December 31, 1994 decreased slightly to $6.2 million from $6.3 million reported in the comparable period in the prior year. For the six months ended December 31, 1994, interest expense was $11.9 million, equal to the amount reported for the six months ended December 31, 1993. Interest expense as a percentage of sales was 2.1 percent for the second quarter ended December 31, 1994, down from 2.8 percent for the comparable period in the previous year. Interest expense as a percentage of sales for the first half of fiscal 1995 was 2.3 percent compared with 3.1 percent in the first half of fiscal 1994. As a result of lower average interest rates, interest expense for the second quarter and the first six months of fiscal 1995 approximated the prior year despite higher average borrowings. The average borrowings outstanding were $263.4 million for the second quarter and $252.5 million for the first half of fiscal 1995, compared to $235.0 million for the second quarter and $227.0 million for the first half of fiscal 1994. The increase in average borrowings is primarily due to debt assumed in the Studer acquisition and increased working capital requirements associated with higher sales volume. The average interest rate on borrowings was 9.4 percent for both the second quarter and the first half of fiscal 1995. This compares to average interest rates of 10.8 percent for the second quarter and 10.5 percent for the first half of fiscal 1994. The decrease in average interest rates reflects the refinancing of unsecured lines of credit with a $200 million committed revolving credit facility agreement completed September 30, 1994. Additional favorable impacts include lower interest rates on debt assumed in fiscal 1994 acquisitions and repayments and retirements of long- term debt, which generally carried higher interest rates than short-term debt. 8 Income before income taxes, minority interest and extraordinary items for the second quarter of fiscal 1995 was $18.6 million, up from $12.6 million in the previous year. For the six months ended December 31, 1994, income before income taxes, minority interest and extraordinary items increased to $25.7 million, compared to $14.3 million in the prior year. The effective tax rate for the second quarter of fiscal 1995 was 34.2 percent compared with 40.0 percent in the prior year. The effective tax rate for the first half of fiscal 1995 was 35.7 percent compared with 40.0 percent in the prior year. The decrease in the effective tax rate for the second quarter and the first half results from lower income in certain high tax rate countries, reduced losses of certain foreign subsidiaries and higher domestic income. 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 $226,000 in the second quarter of fiscal 1995 associated with the early extinguishment of $4.5 million of the 12.0% Senior Subordinated Notes, due August 1, 2002. The Company reported an extraordinary charge, net of a related tax benefit, of $48,000 in the first quarter of fiscal 1995 associated with the early extinguishment of $1.0 million of the 12.0% Senior Subordinated Notes, due August 1, 2002. 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 early 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 December 31, 1994 was $11.9 million, or $0.79 per share, compared with $6.8 million, or $0.54 per share, in the previous year. Net income for the first half of fiscal 1995 was $16.1 million, or $1.07 per share, compared with $7.9 million, or $0.67 per share, in the previous year. Financial Condition - - - ------------------- On September 30, 1994, the Company and certain of its subsidiaries completed a $200 million five-year multi-currency revolving credit facility with a syndicate of banks led by Chemical Bank as Agent and NationsBank as Co-Agent. The credit facility was used by the Company and its subsidiaries to refinance existing unsecured lines of credit and will be used for working capital and other general corporate purposes. Net working capital at December 31, 1994 was $295.7 million, compared with $215.9 million at June 30, 1994. The increase in working capital reflects the refinancing of unsecured lines of credit with the five-year revolving credit facility. 9 Other changes in the Company's balance sheet from June 30, 1994, the end of the preceding fiscal year, to December 31, 1994 are as follows: - - - - Inventories decreased by $14.0 million (5.9 percent), from $238.1 million to $224.1 million. This decrease reflects the successful implementation of a company-wide inventory reduction program. - - - - Excess of cost over fair value of assets acquired increased by $5.9 million, from $34.4 million to $40.3 million, primarily as a result of acquisitions, including the acquisition of the remaining 24 percent of AKG in July 1994. 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 None. (b) Reports on Form 8-K None. 11 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: February 9, 1995 BY: /s/ Sidney Harman ---------------------- Sidney Harman Chairman and Chief Executive Officer DATE: February 9, 1995 BY: /s/ Bernard A. Girod ---------------------- Bernard A. Girod President, Chief Operating Officer, Chief Financial Officer and Secretary 12 EX-27 2 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 QTR-2 JUN-30-1995 DEC-31-1994 14080 683 221466 11260 224100 499314 287520 145727 698570 203566 109500 151 0 0 247173 698570 288718 288718 165967 197881 72287 0 6173 18550 6336 12170 0 226 0 11944 0.79 0.79
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