-----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, i3l2FwgYNvvNvht+MN2iqEFhgyu6NY7gFUy1LKwsb9rz1jixy6jqQKToUtc15YjN ZRA/aoaf2wc48lUv0im0NQ== 0000800459-95-000007.txt : 19950516 0000800459-95-000007.hdr.sgml : 19950516 ACCESSION NUMBER: 0000800459-95-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARMAN INTERNATIONAL INDUSTRIES INC /DE/ CENTRAL INDEX KEY: 0000800459 STANDARD INDUSTRIAL CLASSIFICATION: HOUSEHOLD AUDIO & VIDEO EQUIPMENT [3651] IRS NUMBER: 112534306 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09764 FILM NUMBER: 95539307 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, 1995 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. 15,158,897 shares of Common Stock, $.01 par value at April 30, 1995. HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES INDEX PART I. FINANCIAL INFORMATION PAGE NO. Item 1. Financial Statements Condensed Consolidated Balance Sheets - March 31, 1995 and June 30, 1994 3 Condensed Consolidated Statements of Operations - Three and Nine Months Ended March 31, 1995 and 1994 4 Condensed Consolidated Statements of Cash Flows - Nine Months Ended March 31, 1995 and 1994 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 MARCH 31, 1995 AND JUNE 30, 1994 (000s omitted except per share amounts)
(Unaudited) (Audited) 03/31/95 6/30/94 ----------- ---------- ASSETS Current Assets: Cash and short-term investments $ 15,842 $ 9,724 Receivables (less allowance for doubtful accounts: $13,381 at March 31, 1995, and $10,241 at June 30, 1994) 241,249 206,801 Inventories Finished goods and inventory purchased for resale 154,550 151,426 Work in process 27,510 20,200 Raw materials and supplies 66,833 66,469 ----------- ---------- Total inventories 248,893 238,095 Other current assets 57,091 35,202 ----------- ---------- Total current assets 563,075 489,822 Investments 3,691 4,139 Investments in unconsolidated subsidiaries 2,701 2,675 Property, plant and equipment, net 185,012 138,555 Other assets 11,766 11,140 Excess of cost over fair value of assets acquired, net 122,203 34,360 ----------- ---------- Total assets $ 888,448 $ 680,691 =========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Notes payable / swing lines $ 25,047 $ 63,140 Current portion of long-term debt 7,926 6,114 Accounts payable 90,862 91,516 Accrued liabilities 172,583 113,174 ----------- ---------- Total current liabilities 296,418 273,944 Other non-current liabilities 11,689 8,514 Borrowings under Revolving Credit Facility 127,367 -- Senior long-term debt 56,640 41,577 Subordinated long-term debt 109,500 115,000 Deferred income 1,411 2,372 Minority interest 4,061 7,263 Shareholders' Equity: Common stock, $0.01 par value 152 151 Additional paid-in capital 159,336 143,144 Equity adjustment from foreign currency translation 7,887 392 Retained earnings 113,987 88,334 ----------- ---------- Net shareholders' equity 281,362 232,021 ----------- ---------- Total liabilities and shareholders' equity $ 888,448 $ 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 NINE MONTHS ENDED MARCH 31, 1995 AND 1994 (000s omitted except per share amounts) (UNAUDITED)
Three Months Ended Nine Months Ended March 31, March 31, 1995 1994 1995 1994 ---------- ---------- ---------- ---------- Net Sales $ 310,493 $ 222,915 $ 827,818 $ 609,302 Cost of Sales 216,598 150,787 567,220 420,025 ---------- ---------- ---------- ---------- Gross Profit 93,895 72,128 260,598 189,277 Selling, general and administrative expenses 70,839 53,784 198,567 143,958 ---------- ---------- ---------- ---------- Operating income 23,056 18,344 62,031 45,319 Other expenses: Interest expense 7,155 5,527 19,064 17,459 Miscellaneous, net 217 (61) 1,628 639 ---------- ---------- ---------- ---------- Income before income taxes, minority interest and extraordinary items 15,684 12,878 41,339 27,221 Income tax expense 4,300 4,699 13,466 10,431 Minority interest 12 -- 133 -- ---------- ---------- ---------- ---------- Income before extraordinary items 11,372 8,179 27,740 16,790 Extraordinary items, net of income taxes -- -- (274) (748) ---------- ---------- ---------- ---------- Net income $ 11,372 $ 8,179 $ 27,466 $ 16,042 ========== ========== ========== ========== Earnings per share of common stock before extraordinary items $ 0.75 $ 0.55 $ 1.84 $ 1.30 ========== ========== ========== ========== Earnings per common share $ 0.75 $ 0.55 $ 1.82 $ 1.25 ========== ========== ========== ========== Weighted average number of common shares outstanding 15,131 14,986 15,103 12,812 ========== ========== ========== ==========
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, 1995 AND 1994 ($000s omitted) (UNAUDITED)
1995 1994 ---------- ---------- Cash flows from operating activities: Net income $ 27,466 $ 16,042 ---------- ---------- Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 33,610 22,414 Amortization of intangible assets 1,905 1,506 Amortization of deferred income (971) (970) Changes in assets and liabilities, net of effects from purchase of companies: (Increase) decrease in: Receivables (14,387) (20,540) Inventories 11,492 (45,890) Other current assets (21,181) (823) Increase (decrease) in: Accounts payable (46,012) 9,202 Accrued liabilities 9,432 260 ---------- ---------- Total adjustments $ (26,112) $ (34,841) ---------- ---------- Net cash provided by (used in) operating activities $ 1,354 $ (18,799) Cash flow from investing activities: Payment for purchase of companies, net of cash acquired (9,556) 8,580 Investments in unconsolidated subsidiaries -- (2,500) Capital expenditures for property, plant and equipment (34,632) (27,444) Other items, net (4,783) 774 ---------- ---------- Net cash used in investing activities $ (48,971) $ (20,590) ---------- ---------- Cash flow from financing activities: Net borrowings under (repayments of) lines of credit (82,762) (13,775) Net proceeds from (repayments of) long-term debt 129,772 (25,007) Proceeds from issuance of common stock -- 87,488 Dividends paid to stockholders (1,813) -- Proceeds from exercise of stock options 1,043 1,810 Net change, foreign currency translation 7,495 1,061 ---------- ---------- Net cash flow provided by financing activities $ 53,735 $ 51,577 ---------- ---------- Net increase in cash and short-term investments 6,118 12,188 Cash and short-term investments at beginning of period 9,724 2,179 ---------- ---------- Cash and short-term investments at end of period $ 15,842 $ 14,367 - ---------------------------------- ========== ========== Supplemental disclosures of cash flow information: Interest paid $ 18,648 $ 19,358 Income taxes paid $ 13,153 $ 7,992 Supplemental schedule of noncash investing activities: Fair value of assets acquired $ 151,384 $ 134,144 Cash paid for the capital stock 10,715 -- ---------- ---------- Liabilities assumed $ 140,669 $ 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, 1995 and 1994 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, 1995 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, 1995 are not necessarily indicative of the results to be expected for the full year. NOTE B - ACQUISITIONS On February 27, 1995, Harman International Industries, Incorporated ("Harman") completed its acquisition of 100 percent of the outstanding shares of Becker GmbH ("Becker") with satisfaction of all conditions remaining after the execution of the share purchase agreement dated February 16, 1995 between Harman, Roland Becker and Becker Holding S.A. Becker is a leading German manufacturer of automotive OEM and consumer automotive aftermarket electronics. Under the terms of the agreement, Harman paid 9.0 million Deutschmarks (approximately $6.0 million) and 400,000 shares of Harman common stock in consideration for all of the issued and outstanding stock of Becker. Harman assumed post-acquisition indebtedness of Becker of 86.0 million Deutschmarks (approximately $57.7 million). Harman funded its acquisition of Becker utilizing its revolving credit facility. The results of operations for the third quarter ended March 31, 1995 include the results of Becker for January 1, 1995 through March 31, 1995, as the acquisition was made effective January 1, 1995. The Consolidated Balance Sheet as of March 31, 1995 includes $57.7 million of borrowings under the Harman revolving credit facility utilized to satisfy Becker post-acquisition indebtedness, as well as other payment obligations of Becker. Pro forma combined results of the Company and Becker for the twelve months ended June 30, 1994, as if the acquisition had occurred July 1, 1993, are net sales of $1,031,003,000, income before extraordinary items of $26,691,000 and earnings per share before extraordinary items of $1.94. Pro forma combined results of the Company and Becker for the six months ended December 31, 1994, as if the acquisition had occurred July 1, 1994, are net sales of $614,506,000, income before extraordinary items of $17,377,000 and earnings per share before extraordinary items of $1.12. 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, 1995 AND 1994 Net sales for the quarter ended March 31, 1995 totaled $310.5 million, a 39.3 percent increase over the comparable period in the prior year. For the first nine months of the year, sales increased 35.9% to $827.8 million. Excluding Becker, which was acquired effective January 1, 1995, sales for the quarter ended March 31, 1995 were $256.5 million, a 15.1 percent increase over the same period a year ago. The Professional Group produced good sales and earnings results for the quarter and the first nine months. Professional sales for the first nine 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 and third quarters only. JBL Professional generated higher sales compared to last year in both domestic and international markets. Soundcraft and DOD contributed strong results. The Consumer Group contributed higher sales and operating results compared to the prior year. Infinity and JBL contributed to the growth as new products led to higher sales and operating results over the same period a year ago. The Automotive OEM Group produced excellent sales and earnings. Shipments of the Infinity Gold audio system designed for the Jeep Grand Cherokee increased over the prior year, as did shipments of the Ford/JBL premium system offered in the Ford Explorer. The success of the new Toyota Avalon, which offers a high-end audio system supplied by the Automotive OEM Group, also contributed to higher sales and earnings. The gross profit margin for the quarter ended March 31, 1995 was 30.2 percent ($93.9 million) compared to 32.4 percent ($72.1 million) in the prior year. The gross profit margin for the first nine months of fiscal 1995 was 31.5 percent ($260.6 million) compared to 31.1 percent ($189.3 million) in the previous year. The gross profit margin percentage for the first nine months 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 decreased compared to the prior year, resulting from lower manufacturing throughput associated with inventory reduction programs which were implemented in September 1994 and lower margin contribution from Becker. 7 Selling, general and administrative expenses represented 22.8 percent of net sales for the quarter ended March 31, 1995, compared to 24.1 percent for the comparable period in the prior year. Selling, general and administrative expenses for the first nine months were 24.0 percent of sales compared to 23.6 percent in the prior year. The increase for the first nine months 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 7.4 percent ($23.1 million) for the third quarter ended March 31, 1995 compared with 8.2 percent ($18.3 million) for the same period in the prior year. For the first nine months, operating income as a percentage of sales increased to 7.5 percent from 7.4 percent reported in the previous year. The increase for the first nine months reflects improved gross profit percentages as discussed above. Interest expense for the three months ended March 31, 1995 increased to $7.2 million from $5.5 million reported in the comparable period in the prior year. For the nine months ended March 31, 1995, interest expense was $19.1 million, compared to $17.5 million for the nine months ended March 31, 1994. Interest expense as a percentage of sales was 2.3 percent for the third quarter ended March 31, 1995, down from 2.5 percent for the comparable period in the previous year. Interest expense as a percentage of sales for the first nine months of fiscal 1995 was 2.3 percent compared with 2.9 percent in the first nine months of fiscal 1994. Despite lower average interest rates, Harman reported higher interest expense for the third quarter and the first nine months due to higher average borrowings. The average borrowings outstanding were $287.3 million for the third quarter and $266.2 million for the first nine months of fiscal 1995, compared to $202.6 million for the third quarter and $220.5 million for the first nine months of fiscal 1994. The increase in average borrowings is primarily due to debt associated with the Becker and Studer acquisitions and increased working capital requirements associated with higher sales volume. The average interest rate on borrowings was 10.0 percent for the third quarter and 9.6 percent for the first nine months of fiscal 1995. This compares to average interest rates of 10.9 percent for the third quarter and 10.6 percent for the first nine months 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 third quarter of fiscal 1995 was $15.7 million, up from $12.9 million in the previous year. For the nine months ended March 31, 1995, income before income taxes, minority interest and extraordinary items increased to $41.3 million, compared to $27.2 million in the prior year. The effective tax rate for the third quarter of fiscal 1995 was 27.4 percent compared with 36.5 percent in the prior year. The effective tax rate for the first nine months of fiscal 1995 was 32.6 percent compared with 38.3 percent in the prior year. The decrease in the effective tax rate for the third quarter and the first nine months results from the restructuring of certain foreign subsidiaries to take advantage of losses which they have incurred. 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 March 31, 1995 was $11.4 million, or $0.75 per share, compared with $8.2 million, or $0.55 per share, in the previous year. Net income for the first nine months of fiscal 1995 was $27.5 million, or $1.82 per share, compared with $16.0 million, or $1.25 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 March 31, 1995 was $266.7 million, compared with $215.9 million at June 30, 1994. The increase in working capital reflects the refinancing of unsecured lines of credit with funds drawn on 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 March 31, 1995 are as follows: - - Excluding Becker, inventories decreased by $11.3 million (4.8 percent), from $238.1 million to $226.7 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 $87.8 million, from $34.4 million to $122.2 million, resulting from acquisitions, including the acquisition of Becker in February 1995 and 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 Form 8-K, dated February 27, 1995, filed on March 14, 1995, containing the following items: Item 2. Acquisition of Becker. Form 8-K/A, dated February 27, 1995, filed on May 8, 1995, containing the following items: Item 2. Acquisition of Becker. 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: May 15, 1995 BY: /s/ Sidney Harman ---------------------- Sidney Harman Chairman and Chief Executive Officer DATE: May 15, 1995 BY: /s/ Bernard A. Girod ---------------------- Bernard A. Girod President, Chief Operating Officer, Chief Financial Officer and Secretary 12 EX-27 2
5 9-MOS JUN-30-1995 MAR-31-1995 15400 442 254630 13381 248893 563075 348949 163937 888448 296418 109500 152 0 0 281210 888448 827818 827818 469040 567220 198567 2895 19064 41339 13466 27740 0 (274) 0 27466 1.82 1.82
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