-----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, ShCkNAZh+NLn4WE5enDhg7u1okeXSDE/HXh0w/XbUSK5uPgI5mvtPVugb9ErDggh xsKAGkqN4xsF2JQ8RAT89g== 0000800459-97-000002.txt : 19970211 0000800459-97-000002.hdr.sgml : 19970211 ACCESSION NUMBER: 0000800459-97-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970207 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: 97520212 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, 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. 18,447,451 shares of Common Stock, $.01 par value, at January 31, 1997. HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES INDEX PART I. FINANCIAL INFORMATION PAGE NO. Item 1. Financial Statements Condensed Consolidated Balance Sheets - December 31, 1996 and June 30, 1996 3 Condensed Consolidated Statements of Operations - Three and six months ended December 31, 1996 and 1995 4 Condensed Consolidated Statements of Cash Flows - Six months ended December 31, 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 10-11 SIGNATURES 12 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1996 AND JUNE 30, 1996 (000s omitted except per share amounts)
(Unaudited) (Audited) ASSETS 12/31/96 06/30/96 -------------- -------------- Current assets Cash and short-term investments $ 8,591 303 Receivables (less allowance for doubtful accounts of $10,005 at December 31, 1996 and $9,962 at June 30, 1996) 323,874 298,110 Inventories 329,362 308,051 Other current assets 47,151 45,506 -------------- -------------- Total current assets 708,978 651,970 -------------- -------------- Property, plant and equipment, net 205,819 200,958 Excess of cost over fair value of assets acquired, net 127,325 129,940 Other assets 16,609 13,341 -------------- -------------- Total assets $1,058,731 996,209 -------------- -------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Notes payable $ 24,029 26,367 Current portion of long-term debt 24,683 6,423 Accounts payable 100,342 109,565 Accrued liabilities 135,986 132,304 -------------- -------------- Total current liabilities 285,040 274,659 -------------- -------------- Borrowings under revolving credit facility 152,511 107,986 Senior long-term debt 18,488 37,125 Subordinated long-term debt 108,750 109,500 Other non-current liabilities 28,771 29,603 Minority interest 747 859 Shareholders' equity Common stock, $.01 par value 187 186 Additional paid-in capital 294,719 293,993 Equity adjustment from foreign currency translation (2,947) (4,906) Retained earnings 172,465 147,204 -------------- -------------- Total shareholders' equity 464,424 436,477 -------------- -------------- Total liabilities and shareholders' equity $1,058,731 996,209 -------------- -------------- See accompanying Notes to Condensed Consolidated Financial Statements.
3 HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS AND SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995 (000s omitted except per share amounts) (UNAUDITED)
Three Months Ended Six Months Ended December 31, December 31, 1996 1995 1996 1995 ------------- ------------- ------------- ------------- Net sales $ 401,319 348,669 739,322 649,143 Cost of sales 283,725 240,754 526,934 451,742 ------------- ------------- ------------- ------------- Gross profit 117,594 107,915 212,388 197,401 Selling, general and administrative expenses 82,800 77,489 160,085 150,702 ------------- ------------- ------------- ------------- Operating income 34,794 30,426 52,303 46,699 Other expenses Interest expense 6,736 7,538 12,894 14,475 Miscellaneous, net 294 590 514 865 ------------- ------------- ------------- ------------- Income before income taxes and minority interest 27,764 22,298 38,895 31,359 Income tax expense 8,208 6,825 11,770 9,948 Minority interest -- 11 -- 45 ------------- ------------- ------------- ------------- Net income $ 19,556 15,462 27,125 21,366 ------------- ------------- ------------- ------------- Net income per common share$ 1.05 0.95 1.46 1.31 ------------- ------------- ------------- ------------- Weighted average number of common shares outstanding 18,652 16,258 18,642 16,248 ------------- ------------- ------------- -------------
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, 1996 AND 1995 ($000s omitted) (UNAUDITED)
1996 1995 ------------- ------------- Cash flows from operating activities: Net income $ 27,125 21,366 ------------- ------------- Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 24,834 24,953 Amortization of intangible assets 2,662 2,771 Amortization of deferred income -- (646) Changes in assets and liabilities, net of effects from purchase of companies: Decrease (increase) in: Receivables (26,542) (10,056) Inventories (24,006) (40,672) Other current assets (1,645) (2,700) Increase (decrease) in: Accounts payable (8,239) (1,996) Accrued liabilities 4,361 (14,530) ------------- ------------- Total adjustments $ (28,575) (42,876) ------------- ------------- Net cash provided by (used in) operating activities $ (1,450) (21,510) ------------- ------------- Cash flows from investing activities: Payment for purchase of companies, net of cash acquired $ -- (11,064) Proceeds from disposition of assets 1,631 171 Capital expenditures (32,265) (33,656) Other items, net (2,122) 185 ------------- ------------- Net cash used in investing activities $ (32,756) (44,364) ------------- ------------- Cash flows from financing activities: Borrowings on (repayments of) lines of credit $ (2,338) (8,948) Net proceeds from long-term debt 44,010 77,317 Dividends paid to shareholders (1,864) (1,594) Effect of stock option program 727 702 Net change, foreign currency translation 1,959 (499) ------------- ------------- Net cash flow provided by financing activities $ 42,494 66,978 ------------- ------------- Net increase (decrease) in cash and short-term investments 8,288 1,104 Cash and short-term investments at beginning of period 303 11,252 ------------- ------------- Cash and short-term investments at end of period $ 8,591 12,356 ------------- ------------- Supplemental disclosures of cash flow information: Interest paid $ 11,501 12,629 Income taxes paid $ 5,593 7,890 Supplemental schedule of non-cash investing activities: Fair value of assets acquired $ -- 14,650 Cash paid for the capital stock -- 11,757 ------------- ------------- Liabilities assumed $ -- 2,893 ------------- -------------
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, 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 December 31, 1996 and the results of their operations and their cash flows for the periods presented. The results of operations for the six months ended December 31, 1996, are not necessarily indicative of the results to be expected for the full year. NOTE B - COMMON STOCK RETIREMENT In January 1997, the Company purchased and retired 220,000 shares of its Common Stock. 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 AND SIX MONTH PERIODS ENDED DECEMBER 31, 1996 AND 1995 Net sales for the quarter ended September 30, 1996 totaled $401.3 million, a 15.1 percent increase over the comparable period in the prior year. Exclusive of currency effects, sales increased 17.8 percent. For the first half of the year, sales increased 13.9 percent to $739.3 million. Exclusive of currency effects, sales rose 16.6 percent in the first half. The Consumer Group, including JBL, Infinity and Harman Kardon, experienced strong sales growth despite softness in the consumer electronics market. Each, we believe, increased market share. The Professional Group performed well in the quarter and the first half. JBL Professional sales benefited from vigorous cinema installation activity in most major markets worldwide. Soundcraft and Lexicon also reported sales growth. The OEM Group produced excellent results. Shipments of high fidelity systems to the automakers increased over the prior year, reflecting the addition of new models, including the Toyota Camry, two new Mitsubishi platforms and European production models of the Jeep Grand Cherokee and the Chrysler Minivan. Audio system shipments for Chrysler's minivan models in the United States and the Dodge Ram pickup trucks also increased over the prior year. Sales in the quarter and the first half included our first substantial shipment to Compaq for its Presario line. The gross profit margin for the quarter ended December 31, 1996 was 29.3 percent ($117.6 million) compared to 31.0 percent ($107.9 million) in the prior year. The gross profit margin for the first half of fiscal 1997 was 28.7 percent ($212.4 million) compared to 30.4 percent ($197.4 million) in the previous year. The decrease in the gross profit margin rate reflects the impact of start-up costs associated with the Audio for Computers unit and the effect of a larger percentage of consumer product sales in the total sales mix. Operating income as a percentage of sales was 8.7 percent ($34.8 million) for the quarter ended December 31, 1996, equal to 8.7 percent 7 ($30.4 million) for the same period in the prior year. For the first half, operating income as a percentage of sales was 7.0 percent ($52.3 million) compared to 7.2 percent ($46.7 million) in the prior year. For the quarter and the first half, lower gross profit margins were offset by reduced selling, general and administrative costs. Selling, general and administrative costs were lower due to the reduction of overhead costs at Becker and the reduction of research and development and other costs of discontinued operations. Interest expense for the three months ended December 31, 1996 of $6.7 million was down from last year's $7.5 million. For the six months ended December 31, 1996, interest expense was $12.9 million, down from $14.5 million last year. Average borrowings outstanding were $329.7 million for the second quarter of fiscal 1997 and $317.4 million for the first half, down from $366.8 million and $343.1, respectively, for the same periods in the prior year. Lower average borrowings result from the May 1996 secondary stock offering, partially offset by increased working capital requirements and the third quarter fiscal 1996 cash payment for final settlement of the Becker acquisition. The average interest rate on borrowings was 8.2 percent for the second quarter and 8.1 percent for the six months ended December 31, 1996. The average interest rates for the comparable periods in the prior year were 8.2 percent and 8.4 percent, respectively. The decrease in average interest rates results from lower interest rates in Europe and a decrease in the percentage of borrowings under the revolving credit facility drawn in the United States, which generally carry higher interest rates than European and Japanese borrowings. Also, the interest rate on the revolving credit facility was reduced in fiscal 1997 from LIBOR plus 0.30 percent to LIBOR plus 0.25 percent due to the achievement of certain financial criteria in fiscal 1996. Interest expense as a percentage of sales was 1.7 percent for the second quarter and the first half of fiscal 1997, down from 2.2 percent for the same periods in the previous year. Income before income taxes and minority interest for the second quarter of fiscal 1997 was $27.8 million, up from $22.3 million in the prior year. For the six months ended December 31, 1996, income before income taxes and minority interest was $38.9 million, compared with $31.4 million in the prior year period. The effective tax rate for the second quarter of fiscal 1997 was 29.6 percent compared with 30.6 percent in the same period a year ago. The effective tax rate for the first half of fiscal 1997 was 30.3 percent compared with 31.7 percent last year. The lower effective tax rate is due to the restructuring of certain foreign subsidiaries to realize the 8 benefit of current and prior year 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 December 31, 1996 was $19.6 million, or $1.05 per share, compared with $15.5 million, or $0.95 per share, in the previous year. Net income for the first half of fiscal 1997 was $27.1 million, or $1.46 per share, compared with $21.4 million, or $1.31 per share, in the prior year. FINANCIAL CONDITION - --------------------------------- Net working capital at December 31, 1996 was $423.9 million, compared with $377.3 million at June 30, 1996. Working capital increased primarily due to higher inventories ($308.1 million at June 30, 1996 and $329.4 million at December 31, 1996) and higher accounts receivable ($298.1 million at June 30, 1996 and $323.9 million at December 31, 1996). Inventories have increased primarily to support new OEM customers Compaq and Toyota and to support higher sales of JBL Professional loudspeakers. Accounts receivable balances are higher due to increased sales in the Consumer, Professional and OEM businesses. Borrowings under the revolving credit facility at December 31, 1996 were $159.9 million, comprised of swing line borrowings of $7.4 million, which are included in notes payable, and competitive advance borrowings and revolving credit borrowings of $152.5 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. 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 (a) The date of the annual meeting of stockholders was November 13, 1996. (b) Dr. Sidney Harman was re-elected as a director of the Company with 16,728,012 affirmative votes and 167,412 votes withholding authority. Dr. Harman will serve a three- year term expiring at the 1999 Annual Meeting of Stockholders. Ms. Shirley Hufstedler was re-elected as a director of the Company with 16,786,957 affirmative votes and 108,467 votes withholding authority. Ms. Hufstedler will serve a three-year term expiring at the 1999 Annual Meeting of Stockholders. (c) The proposal to amend and restate the 1992 Incentive Plan was approved with 13,138,101 affirmative votes, 2,762,429 negative votes and 994,994 votes withholding authority, which includes abstensions and broker non-votes. 10 Item 5. Other Information Frank Meredith was named Vice President of Finance and Administration and Chief Financial Officer of Harman International Industries, Inc., on February 5, 1997. 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 7, 1997 BY: /s/ Bernard A. Girod ------------------------------- Bernard A. Girod President, Chief Operating Officer and Secretary DATE: February 7, 1997 BY: /s/ Frank Meredith ------------------------------- Frank Meredith Vice President of Finance and Administration and Chief Financial Officer
12 EX-27 2 ART 5 FDC FOR 10-Q
5 1000 6-MOS JUN-30-1997 DEC-31-1996 8302 289 333879 10005 329362 708978 414032 208213 1058731 285040 279749 187 0 0 464237 1058731 739322 739322 421104 526934 0 1035 12894 38895 11770 27125 0 0 0 27125 1.46 1.46
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