har8kexh991.htm

Harman International

PRESS RELEASE

August 14, 2007		FOR IMMEDIATE RELEASE
		Contact: Robert C. Ryan
		Vice President – Treasurer
		Harman International Industries, Incorporated
		202-393-1101

HARMAN INTERNATIONAL REPORTS FOURTH QUARTER AND

FULL YEAR RESULTS

Washington, D.C. – Harman International Industries, Incorporated (NYSE: HAR) today announced results for the fiscal year ended June 30, 2007. Net sales were $3.551 billion, an increase of 9 percent compared to last year. Net income increased 23 percent to $314 million for the year. Earnings per diluted share were $4.72 compared to $3.75 a year ago, a 26 percent increase. After non-recurring restructuring charges, merger costs and tax items, earnings per diluted share were $4.14 compared to $3.89 last year.

Automotive net sales for the fiscal year were $2.493 billion compared to $2.238 billion a year ago, an increase of 11 percent compared to last year. Consumer net sales were $498 million compared to $493 million a year ago, a 1 percent increase. Professional net sales were $561 million compared to $517 million a year ago, an increase of 8 percent compared to the prior year.

Net sales for the fourth quarter were $911 million, an increase of 6 percent compared to the prior year. Net income was $105 million compared to $65 million a year ago, a 62 percent increase. Earnings per diluted share were $1.58 compared to $0.95 in the fourth quarter last year, a 66 percent increase. After fourth quarter non-recurring restructuring charges, merger costs and tax items, earnings per diluted share were $0.98.

All three operating segments reported higher sales for the fourth quarter compared to the prior year. Automotive sales were $635 million, an increase of 6 percent. Consumer sales grew 2 percent to $124 million. Professional sales were $153 million, 12 percent higher than last year’s quarter.

Dr. Sidney Harman, Executive Chairman, and Dinesh Paliwal, Chief Executive Officer, commented:

August 14, 2007

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“We achieved good results in fiscal 2007 and completed the year with a strong balance sheet. Automotive expanded its Infotainment Systems offerings from luxury to mid-range and entry-level cars. Professional continues to grow through development of new technologies enabling simplified and centralized control of complex audio systems. Consumer sales were higher than last year but tremendous competition in the multimedia market had an adverse effect on operating margins. Our balance sheet was strengthened by repurchasing $129 million of our common stock during the year and reducing debt by $121 million.

On April 26, 2007, Harman announced that it had entered into a merger agreement with affiliates of Kohlberg Kravis Roberts & Co. L.P. and GS Capital Partners in a transaction valued at approximately $8 billion. We anticipate completing the transaction during the third or fourth quarter of this calendar year.”

At 4:30 p.m. EDT today, Harman International will host an analyst and investor conference call to discuss the results for the three and twelve months ended June 30, 2007. To participate in the conference call, please dial (877) 777-1968 or for international calls dial (612) 332-1025 prior to 4:30 p.m. EDT. Please let the operator know that you would like to join the Harman International call.

A replay of the conference call will be available following the completion of the call at approximately 8:00 p.m. EDT. The replay will be available through August 21, 2007. Please call (800) 475-6701 to access the replay. For international calls please call (320) 365-3844. The access code number is 882301.

Harman International will be web-casting the conference call. The web-cast can be accessed at http://65.197.1.5/att/confcast as well as www.harman.com, in the Investor Relations section. Conference I.D. is 1112828117 with a Passcode of Harman. Participation through the web-cast will be in listen-only mode. You will need Windows Media Player or Real Player to listen to the presentation. An archive will be available for 7 days following the presentation.

August 14, 2007

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Harman International Industries, Incorporated (www.harman.com) is a leading manufacturer of high-quality, high-fidelity audio products and electronic systems for the automotive, consumer and professional markets. The Company’s stock is traded on the New York Stock Exchange under the symbol: HAR.

Note: Except for historical information contained herein, the matters discussed are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act. You should not place undue reliance on these statements. We base these statements on particular assumptions that we have made in light of our industry experience, as well as our perception of historical trends, current market conditions, current economic data, expected future developments and other factors that we believe are appropriate under the circumstances. These statements involve risks and uncertainties that could cause actual results to differ materially from those suggested in the forward-looking statements, including but not limited to our failure to complete the transaction with affiliates of Kohlberg Kravis Roberts & Co., L.P. and GS Capital Partners, the effect of changes in consumer confidence, a rise in interest rates affecting consumer spending, automobile industry sales and production rates, the loss of one or more significant customers, including our automotive customers, model-year changeovers and customer acceptance in the automotive industry, our ability to satisfy contract performance criteria, availability of key components to the products we manufacture, competitive products, customer acceptance of our consumer and professional products, fluctuations in currency exchangerates, the outcome of pending or future litigation and other claims, labor disputes at our facilities and those of our customers or common carriers, general economic conditions and other risks detailed in filings made by Harman International with the Securities and Exchange Commission.

HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (000s omitted except per share amounts) (unaudited)

	Three Months Ended						Twelve Months Ended
	June 30,						June 30,
	2007			2006			2007			2006


Net sales	$	911,113			859,117			3,551,144			3,247,897
Cost of sales		612,209			560,228			2,339,938			2,095,327


Gross profit		298,904			298,889			1,211,206			1,152,570

Selling, general and administrative expenses		217,478			194,491			824,819			755,329

Operating income		81,426			104,398			386,387			397,241

Other expenses:
Interest expense, net		523			2,138			1,500			13,027
Miscellaneous, net		794			5,400			2,682			8,027

Income before income taxes and minority interest		80,109			96,860			382,205			376,187

Income tax expense		(24,183	)		32,361			70,186			121,877
Minority interest		(631	)		(268	)		(1,944	)		(985	)


Net income	$	104,923			64,767			313,963			255,295




Basic earnings per share	$	1.61			0.97			4.81			3.85
Diluted earnings per share	$	1.58			0.95			4.72			3.75


Shares outstanding – Basic		65,196			66,733			65,310			66,260
Shares outstanding – Diluted		66,352			67,984			66,449			68,105

HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED GAAP CONDENSED CONSOLIDATED BALANCE SHEETS (000s omitted)
	(unaudited)
	June 30,		June 30,
	2007		2006
ASSETS
Current assets
Cash and cash equivalents	$	106,141		291,758
Accounts receivable		486,557		444,474
Inventories		453,156		344,957
Other current assets		187,299		186,778

Total current assets		1,233,153		1,267,967


Property, plant and equipment		591,976		521,935
Goodwill		403,749		381,219
Other assets		279,990		204,631

Total assets	$	2,508,868		2,375,752


LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term borrowings	$	1,838		1,751
Current portion of long-term debt		17,029		16,337
Accounts payable		356,763		320,327
Accrued liabilities		440,351		549,481


Total current liabilities		815,981		887,896

Borrowings under revolving credit facility		55,000		159,900
Long-term debt		2,661		19,566
Other non-current liabilities		141,185		80,226

Total shareholders’ equity		1,494,041		1,228,164

Total liabilities and shareholders’ equity	$	2,508,868		2,375,752

HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RECONCILIATION OF GAAP TO NON-GAAP RESULTS (000s omitted except per share amounts) (unaudited)
											Three Months Ended
	Three Months Ended June 30, 2007										June 30, 2006
	GAAP			Adjustments				Non-GAAP			GAAP


Net sales	$	911,113			---				911,113			859,117
Cost of sales		612,209			---				612,209			560,228


Gross profit		298,904			---				298,904			298,889

Selling, general and administrative expenses		217,478			(8,388	)	(a)		209,090			194,491

Operating income		81,426			8,388				89,814			104,398

Other expenses:
Interest expense, net		523			---				523			2,138
Miscellaneous, net		794			---				794			5,400

Income before income taxes and minority interest		80,109			8,388				88,497			96,860

Income tax expense		(24,183	)		48,530		(b)		24,347			32,361
Minority interest		(631	)		---				(631	)		(268	)


Net income	$	104,923			(40,142	)			64,781			64,767




Basic earnings per share	$	1.61			(0.62	)			0.99			0.97
Diluted earnings per share	$	1.58			(0.60	)			0.98			0.95


Shares outstanding – Basic		65,196			65,196				65,196			66,733
Shares outstanding – Diluted		66,352			66,352				66,352			67,984

(a)

Restructuring charges in the amount of $4.6 million were recorded during the fourth quarter to increase efficiency in manufacturing and engineering. Merger costs related to our proposed transaction with affiliates of Kohlberg Kravis Roberts & Co. L.P. and GS Capital Partners were incurred during the fourth quarter in the amount of $3.8 million.

(b)

Income tax expense includes $46.7 million of tax items, net, resulting from a recent court decision that allows certain tax payers to recognize foreign tax credits. The tax effects of the restructuring charges and merger costs were $1.6 million and $0.2 million, respectively.

HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RECONCILIATION OF GAAP TO NON-GAAP RESULTS (000s omitted except per share amounts) (unaudited)
											Year Ended
	Year Ended June 30, 2007										June 30, 2006
	GAAP			Adjustments				Non-GAAP			GAAP


Net sales	$	3,551,144			---				3,551,144			3,247,897
Cost of sales		2,339,938			---				2,339,938			2,095,327


Gross profit		1,211,206			---				1,211,206			1,152,570

Selling, general and administrative expenses		824,819			(10,879	)	(a)		813,940			755,329

Operating income		386,387			10,879				397,266			397,241

Other expenses:
Interest expense, net		1,500			---				1,500			13,027
Miscellaneous, net		2,682			---				2,682			8,027

Income before income taxes and minority interest		382,205			10,879				393,084			376,187

Income tax expense		70,186			49,413		(b)		119,599			121,877
Minority interest		(1,944	)		---				(1,944	)		(985	)


Net income	$	313,963			(38,534	)			275,429			255,295




Basic earnings per share	$	4.81			(0.59	)			4.22			3.85
Diluted earnings per share	$	4.72			(0.58	)			4.14			3.75


Shares outstanding – Basic		65,310			65,310				65,310			66,260
Shares outstanding – Diluted		66,449			66,449				66,449			68,105

(a)

Restructuring charges in the amount of $7.1 million were recorded during fiscal 2007 to increase efficiency in manufacturing and engineering. Merger costs related to our proposed transaction with affiliates of Kohlberg Kravis Roberts & Co. L.P. and GS Capital Partners were incurred during the fourth quarter in the amount of $3.8 million.

(b)

HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED

STATEMENT REGARDING GAAP AND NON-GAAP RESULTS

Harman International has provided a reconciliation of non-GAAP measures in order to provide the users of these financial statements with a better understanding of our fiscal 2007 restructuring charges, merger costs and tax items. These non-GAAP measures are not measurements under accounting principles generally accepted in the United States. These measurements should be considered in addition to, but not as a substitute for, the information contained in our financial statements prepared in accordance with GAAP.