-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LxPKH5cmHWu++UG0oIG4RHuYojHXCi3dyaDLiop5W2s2Q5jVfc4/Ng5I8sSuAOGT vnS+IpY93Thj4Ft7730nGg== 0000800459-96-000015.txt : 19961108 0000800459-96-000015.hdr.sgml : 19961108 ACCESSION NUMBER: 0000800459-96-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961107 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: 96655713 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: September 30, 1996 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 (I.R.S. Employer Identification No.) of incorporation or organization) 1101 PENNSYLVANIA AVENUE, NW 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. 18,645,767 shares of Common Stock, $.01 par value, at October 31, 1996. HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES INDEX PART I. FINANCIAL INFORMATION PAGE NO. Item 1. Financial Statements Condensed Consolidated Balance Sheets - September 30, 1996 and June 30, 1996 3 Condensed Consolidated Statements of Operations - Three months ended September 30, 1996 and 1995 4 Condensed Consolidated Statements of Cash Flows - Three months ended September 30, 1996 and 1995 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of the Results of Operations and Financial Condition 7-9 PART II. OTHER INFORMATION 10 SIGNATURES 11 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 1996 AND JUNE 30, 1996 (000s omitted except per share amounts) (Unaudited) (Audited) ASSETS 09/30/96 06/30/96 -------------- -------------- Current assets Cash and short-term investments $ 1,575 303 Receivables (less allowance for doubtful accounts of $9,850 at September 30, 1996 and $9,962 at June 30, 1996) 309,820 298,110 Inventories 331,636 308,051 Other current assets 49,075 45,506 -------------- -------------- Total current assets 692,106 651,970 -------------- -------------- Property, plant and equipment, net 202,272 200,958 Excess of cost over fair value of assets acquired, net 129,225 129,940 Other assets 13,121 13,341 -------------- -------------- Total assets $1,036,724 996,209 -------------- -------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Notes payable $ 25,202 26,367 Current portion of long-term debt 23,919 6,423 Accounts payable 107,695 109,565 Accrued liabilities 129,450 132,304 -------------- -------------- Total current liabilities 286,266 274,659 -------------- -------------- Borrowings under revolving credit facility 149,316 107,986 Senior long-term debt 18,406 37,125 Subordinated long-term debt 108,750 109,500 Other non-current liabilities 29,528 29,603 Minority interest 791 859 Shareholders' equity Common stock, $.01 par value 186 186 Additional paid-in capital 294,443 293,993 Equity adjustment from foreign currency translation (4,803) (4,906) Retained earnings 153,841 147,204 -------------- -------------- Total shareholders' equity 443,667 436,477 -------------- -------------- Total liabilities and shareholders' equity $1,036,724 996,209 -------------- --------------
See accompanying Notes to Condensed Consolidated Financial Statements. 3 HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 (000s omitted except per share amounts) (UNAUDITED) Three Months Ended September 30, 1996 1995 ------------- ------------- Net sales $ 338,003 300,474 Cost of sales 243,209 210,988 ------------- ------------- Gross profit 94,794 89,486 Selling, general and administrative expenses 77,285 73,213 ------------- ------------- Operating income 17,509 16,273 Other expenses: Interest expense 6,158 6,937 Miscellaneous, net 220 275 ------------- ------------- Income before income taxes and minority interest 11,131 9,061 Income tax expense 3,562 3,123 Minority interest -- 34 ------------- ------------- Net income $ 7,569 5,904 ------------- ------------- Net income per common share $ 0.41 0.36 ------------- ------------- Weighted average number of common shares outstanding 18,632 16,235 ------------- -------------
See accompanying Notes to Condensed Consolidated Financial Statements. 4 HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 ($000s omitted) (UNAUDITED) 1996 1995 ------------- ------------- Cash flows from operating activities: Net income $ 7,569 5,904 ------------- ------------- Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 12,257 12,393 Amortization of intangible assets 1,326 1,335 Amortization of deferred income -- (323) Changes in assets and liabilities, net of effects from purchase of companies: Decrease (increase) in: Receivables (11,710) (16,979) Inventories (23,585) (20,294) Other current assets (3,569) (7,642) Increase (decrease) in: Accounts payable (1,870) 2,785 Accrued liabilities (2,854) (14,517) ------------- ------------- Total adjustments $ (30,005) (43,242) ------------- ------------- Net cash provided by (used in) operating activities $ (22,436) (37,338) ------------- ------------- Cash flows from investing activities: Payment for purchase of companies, net of cash acquired $ -- (9,133) Capital expenditures (13,741) (13,424) Other items, net (364) 2,995 ------------- ------------- Net cash used in investing activities $ (14,105) (19,562) ------------- ------------- Cash flows from financing activities: Net borrowings under (repayments of) lines of credit $ (1,165) 1,718 Net proceeds from long-term debt 39,357 52,414 Dividends paid to shareholders (932) (875) Effect of stock option program 450 319 Net change, foreign currency translation 103 875 ------------- ------------- Net cash flow provided by financing activities $ 37,813 54,451 ------------- ------------- Net increase (decrease) in cash and short-term investments 1,272 (2,449) Cash and short-term investments at beginning of period 303 11,252 ------------- ------------- Cash and short-term investments at end of period $ 1,575 8,803 ------------- ------------- Supplemental disclosures of cash flow information: Interest paid $ 6,937 7,221 Income taxes paid $ 3,678 5,901 Supplemental schedule of non-cash investing activities: Fair value of assets acquired $ -- 11,788 Cash paid for the capital stock -- 9,826 ------------- ------------- Liabilities assumed $ -- 1,962 ------------- -------------
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 ended September 30, 1996 and 1995, 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 September 30, 1996 and the results of their operations and their cash flows for the periods presented. The results of operations for the three months ended September 30, 1996, 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 THE THREE MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1995 Net sales for the quarter ended September 30, 1996 totaled $338.0 million, a 12.5 percent increase over the comparable period in the prior year. Sales increased 15.1 percent exclusive of currency effects. The Consumer, Professional and OEM Groups all reported higher sales. The Consumer Group reported higher sales as JBL, Infinity and Harman Kardon increased market share both domestically and abroad. Infinity's launch of the new Compositions Overture line of high performance loudspeakers contributed to the growth. The Professional Group contributed higher sales for the quarter. JBL Professional sales benefited from vigorous cinema installation activity in most major markets worldwide. Soundcraft's higher sales reflected strong demand for its new Ghost mixing console. AKG and Studer operations both improved substantially. The OEM Group produced sales growth in excess of 20 percent. Its Audio for Computers unit completed the first full quarter of sales of JBL-Pro branded audio systems to Compaq for its new line of Presario personal computers. Shipments of high fidelity systems to the automakers increased over last year in part because of the addition of new models at Chrysler, Toyota and Mitsubishi. Audio system shipments for the Chrysler Minivan and the Dodge Ram Pickup in the United States were particularly strong. Becker reported increased sales to its major customers, Mercedes Benz, BMW and Porsche. During the first quarter, BMW awarded all BMW 5-Series radio production for the 1998 model year to Becker. The gross profit margin for the quarter ended September 30, 1996 was 28.0 percent ($94.8 million) compared to 29.8 percent ($89.5 million) in the prior year. The decrease in the gross profit margin rate for the quarter reflects the impact of start-up costs associated with the new Audio for Computers unit and aggressive pricing in certain consumer product lines to build market share. 7 Operating income as a percentage of sales was 5.2 percent ($17.5 million) for the quarter ended September 30, 1996 compared with 5.4 percent ($16.3 million) for the same period in the prior year. The lower operating income percentage results from lower gross margin as discussed above partially offset by a decrease in selling, general and administrative expenses as a percentage of sales. Interest expense for the three months ended September 30, 1996 of $6.2 million was down from last year's $6.9 million. Average borrowings outstanding were $307.1 million for the first quarter of fiscal 1997, down from $323.8 million for the same period in the prior year. Lower average borrowings result from the May 1996 secondary stock offering, partially offset by increased working capital requirements and cash outlays for the Madrigal acquisition and the final settlement of the Becker acquisition. The average interest rate on borrowings was 8.0 percent for the first quarter, down from 8.6 percent for the first quarter of the prior year. The decrease in average interest rates results from changes in the mix of borrowings to include a larger portion under the committed revolving credit facility, which carries interest rates at LIBOR plus 0.25 percent. The borrowing rate was reduced during the first quarter from LIBOR plus 0.30 percent due to the achievement of certain financial criteria in fiscal 1996. Interest expense as a percentage of sales was 1.8 percent for the first quarter of fiscal 1997, down from 2.3 percent for the comparable period in the previous year. Income before income taxes and minority interest for the first quarter of fiscal 1997 was $11.1 million, up from $9.1 million in the prior year. The effective tax rate for the first quarter of fiscal 1997 was 32.0 percent compared with 34.5 percent in the same period a year ago. The decrease in the effective tax rate is due to the restructuring of certain foreign subsidiaries to take advantage of prior years' tax losses and the utilization of tax loss carryforwards at certain foreign subsidiaries. The Company calculates its effective tax rate based upon its current estimate of annual results. Net income for the three months ended September 30, 1996 was $7.6 million, or $0.41 per share, compared with $5.9 million, or $0.36 per share, in the previous year. 8 FINANCIAL CONDITION - --------------------------------- Net working capital at September 30, 1996 was $405.8 million, compared with $377.3 million at June 30, 1996. Working capital increased primarily due to the increase in inventories from $308.1 million at June 30, 1996 to $331.6 million at September 30, 1996. Higher inventory levels result from increased sales volume and new product introductions. Borrowings under the revolving credit facility at September 30, 1996 were $159.4 million, comprised of swing line borrowings of $10.1 million, which are included in notes payable, and competitive advance borrowings and revolving credit borrowings of $149.3 million. Borrowings under the revolving credit facility at June 30, 1996 were $120.9 million, comprised of swing line borrowings of $12.9 million and competitive advance borrowings and revolving credit borrowings of $108.0 million. Increased borrowings reflect the financing of higher working capital requirements as discussed above. OTHER The Company sold its Pyle Industries automotive aftermarket manufacturing unit in October 1996. The disposition does not materially impact the financial position of the Company. Except for historical information contained herein, the matters discussed are forward-looking statements which involve risks and uncertainties that could cause actual results to differ materially from those suggested in the forward-looking statements, including, but not limited to the effect of economic conditions, product demand, competitive products and other risks detailed in the Company's other Securities and Exchange Commission filings. 9 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. 10 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: November 7, 1996 BY: /s/ Sidney Harman ------------------------------- Sidney Harman Chairman and Chief Executive Officer DATE: November 7, 1996 BY: /s/ Bernard A. Girod ------------------------------- Bernard A. Girod President, Chief Operating Officer, Chief Financial Officer and Secretary
11 EX-27 2 ART 5 FDS FOR 10-Q
5 1000 3-MOS JUN-30-1997 SEP-30-1996 1379 196 319670 9850 331636 692106 402650 200378 1036724 286266 276472 186 0 0 443481 1036724 338003 338003 190738 243209 0 630 6158 11131 3562 7569 0 0 0 7569 0.41 0.41
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