UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): April 28, 2011
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
(Exact Name of Registrant as Specified in Charter)
Delaware (State or Other Jurisdiction of Incorporation) |
001-09764 (Commission File Number) |
11-2534306 (IRS Employer Identification No.) |
400 Atlantic Street, Suite 1500
Stamford, CT 06901
(Address of Principal Executive Offices) (Zip Code)
Registrants telephone number, including area code: (203) 328-3500
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On April 28, 2011, Harman International Industries, Incorporated issued a press release announcing its financial results for the third quarter ended March 31, 2011. A copy of the press release is furnished as part of this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
See Item 2.02 Results of Operations and Financial Condition above.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. |
Description | |
99.1 | Harman International Industries, Incorporated press release dated April 28, 2011. |
SIGNATURE
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 hereunto duly authorized.
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED | ||
By: | /s/ Todd A. Suko | |
Todd A. Suko | ||
Executive Vice President, General Counsel and Secretary |
Date: April 28, 2011
Exhibit 99.1 |
||||||
April 28, 2011 FOR IMMEDIATE RELEASE |
Contact: Robert V. Lardon 203.328.3518 | |||||
robert.lardon@harman.com |
HARMAN reports 13% Increase in Sales and 100% Increase in Operating Income year over year
| Increases Earnings per Share to $0.51 from $0.21 |
| Exceeds Target for $400 Million STEP Change Cost Savings |
| Wins Large Asian Business and Expands VW Group Award to $1.6 Billion |
| Grows Scalable Platform to $3.5 Billion; Backlog of Awarded Business at $13 Billion |
STAMFORD, CT, April 28, 2011 Harman International Industries, Incorporated, the leading global audio and infotainment group (NYSE: HAR), today announced results for the third quarter ended March 31, 2011. Net sales for the quarter were $948 million, an increase of 13 percent compared to the same period last year. Third quarter operating income was $54 million, an improvement of $27 million compared to the same period last year. Earnings from continuing operations per diluted share were $0.51 for the quarter compared to $0.21 in the same period last year. On a non-GAAP basis, earnings per diluted share from continuing operations were $0.60 compared to $0.27 in the same period last year.
Our continued focus on execution has helped us achieve a sixth consecutive quarter of top and bottom line growth, said Dinesh C. Paliwal, the Companys Chairman, President and CEO. Im pleased that we have achieved our ambitious goal of a $400 million STEP Change Cost Savings program, announced in February 2008. This early decision enabled HARMAN to overcome the global economic downturn and return to profitability faster than the industry. Having developed a culture of efficiency, we have the foundation to capitalize on multiple profitable growth opportunities. The adoption of our innovative next-generation scalable platform continues to accelerate with the VW Groups Asian business. Awards for this platform now exceed $3.5 billion, bringing our total backlog to $13 billion. We have also won multiple orders from Chinese automotive companies for our branded audio systems. We are executing our emerging market growth strategy and excellent progress is being made across all divisions, added Paliwal.
FY 2011 Key Figures Total Company | Three Months Ended March 31 | Nine Months Ended March 31 | ||||||||||||||||||||||||||||||
All figures from continuing operations unless otherwise noted | Increase (Decrease) |
Increase (Decrease) |
||||||||||||||||||||||||||||||
$ millions (except per share data) | 3M FY11 |
3M FY10 |
Nominal | Local Currency1 |
9M FY11 |
9M FY10 |
Nominal | Local Currency1 |
||||||||||||||||||||||||
Net sales |
948 | 837 | 13 | % | 13 | % | 2,741 | 2,514 | 9 | % | 13 | % | ||||||||||||||||||||
Gross profit |
249 | 218 | 14 | % | 14 | % | 742 | 661 | 12 | % | 16 | % | ||||||||||||||||||||
Percent of net sales |
26.2 | % | 26.0 | % | 27.1 | % | 26.3 | % | ||||||||||||||||||||||||
SG&A & Other |
195 | 191 | 2 | % | 3 | % | 578 | 601 | (4 | %) | 0 | % | ||||||||||||||||||||
Operating income |
54 | 27 | 100 | % | 95 | % | 164 | 60 | 174 | % | 167 | % | ||||||||||||||||||||
Percent of net sales |
5.7 | % | 3.2 | % | 6.0 | % | 2.4 | % | ||||||||||||||||||||||||
Net Income from continuing operations attributable to Harman International Industries, Incorporated |
37 | 15 | 145 | % | 131 | % | 117 | 17 | n.m. | n.m. | ||||||||||||||||||||||
Diluted earnings per share from continuing operations attributable to Harman International Industries, Incorporated |
0.51 | 0.21 | 1.64 | 0.24 | ||||||||||||||||||||||||||||
Restructuring-related costs |
10 | 6 | 12 | 14 | ||||||||||||||||||||||||||||
Goodwill impairment charge |
0 | 0 | 0 | 12 | ||||||||||||||||||||||||||||
Net Income from discontinued operations |
0 | 3 | 0 | 8 | ||||||||||||||||||||||||||||
Diluted earnings per share from Discontinued Operations |
0.00 | 0.05 | 0.00 | 0.12 | ||||||||||||||||||||||||||||
Non-GAAP from continuing operations1 |
||||||||||||||||||||||||||||||||
Gross profit |
250 | 219 | 15 | % | 14 | % | 745 | 666 | 12 | % | 15 | % | ||||||||||||||||||||
Percent of net sales |
26.4 | % | 26.1 | % | 27.2 | % | 26.5 | % | ||||||||||||||||||||||||
SG&A & Other |
187 | 186 | 1 | % | 1 | % | 569 | 580 | (2 | %) | 2 | % | ||||||||||||||||||||
Operating income |
63 | 33 | 93 | % | 88 | % | 176 | 86 | 105 | % | 103 | % | ||||||||||||||||||||
Percent of net sales |
6.7 | % | 3.9 | % | 6.4 | % | 3.4 | % | ||||||||||||||||||||||||
Net Income from continuing operations attributable to Harman International Industries, Incorporated |
43 | 19 | 129 | % | 118 | % | 125 | 39 | n.m. | n.m. | ||||||||||||||||||||||
Diluted earnings per share from continuing operations attributable to Harman International Industries, Incorporated |
0.60 | 0.27 | 1.75 | 0.55 | ||||||||||||||||||||||||||||
Shares outstanding diluted (in millions) |
72 | 71 | 72 | 71 |
1 | A non-GAAP measure, see reconciliations of non-GAAP measures later in this release. n.m. = Not Meaningful |
Summary of Continuing Operations
Gross margin increased to 26.2 percent for the third quarter ended March 31, 2011, an improvement of 0.2 percentage points. Gross margin on a non-GAAP basis increased to 26.4 percent for the third quarter, an improvement of 0.3 percentage points. SG&A and other expense as a percentage of sales on a non-GAAP basis for the third quarter declined by 2.5 percentage points to 19.7 percent. The Companys improved operating margin was primarily driven by higher sales, the monetizing of certain intellectual property rights, and improved productivity, largely offset by our temporarily elevated gross R&D costs required to achieve key customer milestones and higher expense related to first time ever participation at several major automotive trade shows.
HARMAN exceeded its goal of $400 million in permanent cost and productivity savings under the Companys STEP Change Cost Savings program.
Executing Against All Four Strategic Pillars
The Company made significant progress during the quarter against each of its four strategic pillars, which form the foundation for future profitable growth.
1. Growing Automotive Audio
HARMANs focused branding and marketing programs with its long-standing customers such as BMW, Hyundai, Lexus/Toyota, and Mercedes Benz, are gaining traction resulting in increased penetration for branded audio systems. HARMAN is also taking its world leadership in premium branded audio to hybrid and electric cars with its patented, energy-efficient GreenEdge technology. Recent awards in China include branded audio for a new electric vehicle by the BYD Daimler joint venture company, the Geely Motors Emgrand EC8, and the new BYD e6 electric vehicle. In addition, HARMAN introduced its revolutionary QuantumLogic surround technology for its JBL® Professional audio system in Ferraris new FF.
2. Growing Smart Infotainment
HARMAN is driving the adoption of new technologies that form the Connected Car ecosystem. During the quarter, HARMAN launched industry leading solutions for infotainment. Launched in cooperation with Toyota, the Entune infotainment system features ground-breaking connected car applications such as Microsoft Bing search for points of interest, iheartradio, and Pandora music search. HARMAN also launched its innovative navigation solution Becker® MAP PILOT for Mercedes Benz, which gives drivers a feature-rich and upgradeable navigation solution without compromising the convenience of a highly integrated in-dash OEM solution.
The Company continued to leverage its leadership position, gaining scale and penetration through its award for its next-generation platform for Volkswagen Group brands Audi, SEAT, Skoda, and Volkswagen in the Asian markets. The new award builds on HARMANs previously announced next-generation scalable infotainment award for the automakers European and US marketed vehicles. Total order value of this award is now $1.6 billion, bringing our scalable platform awards to $3.5 billion.
3. Growing in Emerging Markets
HARMAN continues to expand its presence in all businesses in the emerging markets of Brazil, Russia, India and China where the Company is targeting $1.5 billion in revenues by 2015. HARMAN reports that its Dandong facility is nearing completion in China. The custom-built, 460,000 square foot facility will be HARMANs largest and most technologically advanced, featuring dual operations for automotive electronics and professional audio systems. The facility is expected to come on-line in July 2011.
4. Getting Costs and Capital Right
The Company noted that while it has exceeded its cost savings goal under the STEP Change program, the discipline gained in the process continues, which included the closure or consolidation of 16 HARMAN facilities and the reduction of 2250 jobs in high-cost countries during the past three years.
The Company continues to deploy its capital wisely through investments in organic growth initiatives such as its new facility in Dandong, a planned expansion of its manufacturing operation in Hungary and its new North American manufacturing and engineering facility in Queretaro, Mexico. Additionally, the Company continues to evaluate and execute a variety of capital strategies intended to drive value to shareholders including selected technology acquisitions, such as 3dB Research Limited in Vancouver Canada, and reinstatement of the quarterly dividend.
2
Investor and Analyst Call on April 28, 2011
On Thursday, April 28, 2011 at 11:00 a.m. EDT, HARMANs management will host an analyst and investor conference call to discuss the third quarter results. Those who wish to participate via audio in the earnings conference call scheduled at 11:00 a.m. EDT should dial 1.800-891-3493 (U.S.) or +1 (212) 231-2920 (International) ten minutes before the call and reference HARMAN Access Code 21520338.
In addition, HARMAN invites you to visit the Investors section of its website at: www.harman.com where visitors can sign-up for email alerts and conveniently download copies of historical earnings releases and supporting slide presentations, among other documents. The fiscal third quarter earnings release and supporting materials will be posted on the site at approximately 8:00 a.m. EDT, Thursday, April 28, 2011.
A replay of the call will also be available following its completion at approximately 1:00 pm EDT. The replay will be available through June 30, 2011 at 1:00 pm EDT. To listen to the replay, dial 1(800) 633-8284 (U.S.) or +1 (402) 977-9140 (International), Access Code: 21520338.
If you need technical assistance, call the toll-free Global Crossing Customer Care Line at 1(800) 473-0602 (US) or +1 (303) 446-4604 (International).
General Information
HARMAN (www.harman.com) designs, manufactures and markets a wide range of audio and infotainment solutions for the automotive, consumer and professional markets supported by 15 leading brands including AKG®, Harman Kardon®, Infinity®, JBL®, Lexicon® and Mark Levinson®. The Company is admired by audiophiles across multiple generations and supports leading professional entertainers and the venues where they perform. More than 20 million automobiles on the road today are equipped with HARMAN audio and infotainment systems. HARMAN has a workforce of about 12,000 people across the Americas, Europe and Asia, and reported sales of $3.6 billion for the twelve months ending March 31, 2011. The Companys shares are traded on the New York Stock Exchange under the symbol NYSE:HAR.
A reconciliation of the non-GAAP measures included in this press release to the most comparable GAAP measures is provided in the tables contained at the end of this press release. HARMAN does not intend for this information to be considered in isolation or as a substitute for other measures prepared in accordance with GAAP.
Forward-Looking Information
Except for historical information contained herein, the matters discussed are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act. One 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 (1) our ability to maintain profitability in our automotive division if there are delays in our product launches which may give rise to significant penalties and increased engineering expense; (2) the loss of one or more significant customers, or the loss of a significant platform with an automotive customer; (3)warranty obligations for defects in our products; (4) fluctuations in currency exchange rates, particularly with respect to the value of the U.S. Dollar and the Euro; (5) our ability to successfully implement our global footprint initiative, including achieving cost reductions and other benefits in connection with the restructuring of our manufacturing, engineering, procurement and administrative organizations; (6) the inability of our suppliers to deliver products at the scheduled rate and disruptions arising in connection therewith; (7) our ability to attract and retain qualified senior management and to prepare and implement an appropriate succession plan for our critical organizational positions; (8) our failure to implement and maintain a comprehensive disaster recovery program; (9) our failure to comply with governmental rules and regulations, including the Foreign Corrupt Practices Act and U.S. export control laws, and the cost of compliance with such laws; (10) our ability to maintain a competitive technological advantage through innovation and leading product designs; (11) the outcome of pending or future litigation and other claims, including, but not limited to, the current stockholder and Employee Retirement Income Security Act of 1974 lawsuits; (12) our ability to enforce or defend our ownership and use of intellectual property rights; and (13) other risks detailed in the Companys Annual Report on Form 10-K for the fiscal year ended June 30, 2010 and other filings made by the Company with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise any forward-looking statement, except as required by law. This press release also makes reference to the Companys sales backlog. The Companys sales backlog reflects anticipated net sales from formally awarded new programs and open replacement programs, less phased-out and cancelled programs. The sales backlog may be impacted by various assumptions embedded in the calculation, including vehicle production levels on new and replacement programs, foreign currency exchange rates and the timing of major program launches.
HAR-E
3
APPENDIX
Automotive Division
FY 2011 Key Figures Automotive | Three Months Ended March 31 | Nine Months Ended March 31 | ||||||||||||||||||||||||||||||
Increase (Decrease) |
Increase (Decrease) |
|||||||||||||||||||||||||||||||
$ millions | 3M FY11 |
3M FY10 |
Nominal | Local Currency1 |
9M FY11 |
9M FY10 |
Nominal | Local Currency1 |
||||||||||||||||||||||||
Net sales |
707 | 630 | 12 | % | 13 | % | 1,978 | 1,841 | 8 | % | 12 | % | ||||||||||||||||||||
Gross profit |
164 | 145 | 13 | % | 13 | % | 470 | 439 | 7 | % | 12 | % | ||||||||||||||||||||
Percent of net sales |
23.2 | % | 23.0 | % | 23.8 | % | 23.8 | % | ||||||||||||||||||||||||
SG&A & Other |
108 | 116 | (7 | %) | (6 | %) | 322 | 385 | (16 | %) | (12 | %) | ||||||||||||||||||||
Operating income |
56 | 29 | 92 | % | 88 | % | 148 | 54 | 175 | % | 160 | % | ||||||||||||||||||||
Percent of net sales |
7.9 | % | 4.6 | % | 7.5 | % | 2.9 | % | ||||||||||||||||||||||||
Restructuring-related costs |
6 | 1 | 10 | 5 | ||||||||||||||||||||||||||||
Goodwill impairment charge |
0 | 0 | 0 | 12 | ||||||||||||||||||||||||||||
Non-GAAP1 |
||||||||||||||||||||||||||||||||
Gross profit |
165 | 145 | 14 | % | 14 | % | 473 | 441 | 7 | % | 12 | % | ||||||||||||||||||||
Percent of net sales |
23.3 | % | 23.1 | % | 23.9 | % | 23.9 | % | ||||||||||||||||||||||||
SG&A & Other |
104 | 115 | (10 | %) | (9 | %) | 315 | 369 | (15 | %) | (10 | %) | ||||||||||||||||||||
Operating income |
61 | 31 | 101 | % | 97 | % | 159 | 72 | 121 | % | 114 | % | ||||||||||||||||||||
Percent of net sales |
8.7 | % | 4.9 | % | 8.0 | % | 3.9 | % |
1 | A non-GAAP measure, see reconciliations of non-GAAP measures later in this release. |
Net sales in the third quarter were $707 million, an increase of 12 percent or 13 percent in local currency, driven by higher production volumes in Automotive and market share gains in the Infotainment business. Gross margin on a non-GAAP basis in the third quarter increased slightly to 23.3 percent from 23.1 percent. SG&A and other expense on a non-GAAP basis in the third quarter was $104 million compared to $115 million in the prior year. The divisions improved operating margin was primarily driven by higher sales, the monetizing of certain intellectual property rights, and improved productivity, largely offset by our temporarily elevated gross R&D costs required to achieve key customer milestones and higher expense related to first time ever participation at several major automotive trade shows.
Automotive Division Highlights
During the quarter, HARMAN launched three industry leading solutions for infotainment and branded audio. Launched in cooperation with Toyota, the Entune infotainment system features ground-breaking connected car applications such as Microsoft Bing search for points of interest, iheartradio, and Pandora music search. In addition, HARMAN introduced its revolutionary QuantumLogic surround technology for its JBL® Professional audio system in Ferraris new FF. HARMAN also launched its innovative navigation solution, Becker® MAP PILOT for Mercedes Benz, which gives drivers a feature-rich and upgradeable navigation solution without compromising the convenience of a highly integrated in-dash OEM solution.
HARMAN demonstrated its broad range of connected infotainment solutions in the Rinspeed BamBoo concept car the worlds first social networking vehicle at the Geneva Auto Show. Technologies included Aha Radio on-demand, interactive, personalized radio, along with its GreenEdge energy-efficient audio solutions and HALOsonic technologies for electric vehicles.
HARMAN is collaborating with Sierra Wireless, a leader in high-speed mobile computing and wireless machine-to-machine communication, to pioneer 4G broadband connectivity for automotive customers. Together with speech-recognition leader Nuance, HARMAN Automotive is continuing to develop intuitive, intelligent voice solutions for todays connected car.
HARMAN was awarded additional business to provide next-generation scalable infotainment systems for Volkswagen Groups new vehicle platforms in the Asian markets. The new award builds on HARMANs previously announced next-generation scalable infotainment award for Volkswagen Groups European and US marketed vehicles. Total order value of this award is now $1.6 Billion. Additional recent awards in China include branded audio for a new electric vehicle by the BYD Daimler joint venture company, the Geely Motors Emgrand EC8, and the new BYD e6 electric vehicle.
4
Consumer Division
FY 2011 Key Figures Consumer | Three Months Ended March 31 | Nine Months Ended March 31 | ||||||||||||||||||||||||||||||
Increase (Decrease) |
Increase (Decrease) |
|||||||||||||||||||||||||||||||
$ millions | 3M FY11 |
3M FY10 |
Nominal | Local Currency1 |
9M FY11 |
9M FY10 |
Nominal | Local Currency1 |
||||||||||||||||||||||||
Net sales |
95 | 81 | 17 | % | 17 | % | 320 | 292 | 10 | % | 14 | % | ||||||||||||||||||||
Gross profit |
26 | 22 | 17 | % | 17 | % | 93 | 80 | 17 | % | 21 | % | ||||||||||||||||||||
Percent of net sales |
27.7 | % | 27.6 | % | 29.0 | % | 27.3 | % | ||||||||||||||||||||||||
SG&A & Other |
28 | 23 | 19 | % | 19 | % | 83 | 74 | 12 | % | 15 | % | ||||||||||||||||||||
Operating income |
(1 | ) | (1 | ) | 90 | % | 83 | % | 10 | 6 | 74 | % | 138 | % | ||||||||||||||||||
Percent of net sales |
(1.5 | %) | (0.9 | %) | 3.1 | % | 2.0 | % | ||||||||||||||||||||||||
Restructuring-related costs |
2 | 1 | 2 | 4 | ||||||||||||||||||||||||||||
Goodwill impairment charge |
0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||
Non-GAAP1 |
||||||||||||||||||||||||||||||||
Gross profit |
26 | 23 | 16 | % | 16 | % | 93 | 80 | 16 | % | 21 | % | ||||||||||||||||||||
Percent of net sales |
27.7 | % | 27.8 | % | 28.9 | % | 27.3 | % | ||||||||||||||||||||||||
SG&A & Other |
26 | 23 | 12 | % | 12 | % | 81 | 70 | 15 | % | 18 | % | ||||||||||||||||||||
Operating income |
1 | 0 | n.m. | n.m. | 12 | 10 | 23 | % | 45 | % | ||||||||||||||||||||||
Percent of net sales |
0.7 | % | (0.3 | %) | 3.7 | % | 3.3 | % |
1 | A non-GAAP measure, see reconciliations of non-GAAP measures later in this release. n.m. = Not Meaningful |
Net sales in the third quarter were $95 million, an increase of 17 percent. This growth was driven by increased market share in the Latin American and Asian markets. Gross margin on a non-GAAP basis in the third quarter was basically flat. SG&A expense on a non-GAAP basis in the third quarter was $26 million compared to $23 million in the prior year. The increase was primarily due to expanded sales channel expense and increased marketing activities.
Consumer Division Highlights
HARMAN launched 17 new products during the third quarter, which represented more than 25% of revenue.
The Company reported excellent growth in Brazil, India and China as a result of both strong market demand and increased penetration.
HARMAN continues to add new points of sale and has improved its position with Apple, Best Buy and Target, based on the launch of its JBL OnAir and OnBeat multimedia products.
The harman/kardon BDS Series of home theater systems continues gaining share in Europe and is now launching in the Americas and Asia.
5
Professional Division
FY 2011 Key Figures Professional | Three Months Ended March 31 | Nine Months Ended March 31 | ||||||||||||||||||||||||||||||
Increase (Decrease) |
Increase (Decrease) |
|||||||||||||||||||||||||||||||
$ millions | 3M FY11 |
3M FY10 |
Nominal | Local Currency1 |
9M FY11 |
9M FY10 |
Nominal | Local Currency1 |
||||||||||||||||||||||||
Net sales |
146 | 126 | 16 | % | 15 | % | 442 | 380 | 16 | % | 17 | % | ||||||||||||||||||||
Gross profit |
59 | 50 | 17 | % | 15 | % | 178 | 147 | 21 | % | 21 | % | ||||||||||||||||||||
Percent of net sales |
40.1 | % | 39.9 | % | 40.3 | % | 38.8 | % | ||||||||||||||||||||||||
SG&A & Other |
39 | 35 | 11 | % | 10 | % | 111 | 95 | 16 | % | 17 | % | ||||||||||||||||||||
Operating income |
19 | 15 | 29 | % | 28 | % | 68 | 52 | 29 | % | 29 | % | ||||||||||||||||||||
Percent of net sales |
13.2 | % | 11.8 | % | 15.3 | % | 13.8 | % | ||||||||||||||||||||||||
Restructuring-related costs |
2 | 4 | (1 | ) | 4 | |||||||||||||||||||||||||||
Goodwill impairment charge |
0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||
Non-GAAP1 |
||||||||||||||||||||||||||||||||
Gross profit |
59 | 51 | 16 | % | 14 | % | 178 | 149 | 19 | % | 19 | % | ||||||||||||||||||||
Percent of net sales |
40.2 | % | 40.3 | % | 40.2 | % | 39.3 | % | ||||||||||||||||||||||||
SG&A & Other |
38 | 32 | 17 | % | 16 | % | 111 | 93 | 19 | % | 20 | % | ||||||||||||||||||||
Operating income |
21 | 19 | 12 | % | 11 | % | 67 | 56 | 18 | % | 18 | % | ||||||||||||||||||||
Percent of net sales |
14.4 | % | 14.9 | % | 15.1 | % | 14.8 | % |
1 | A non-GAAP measure, see reconciliations of non-GAAP measures later in this release. |
Net sales in the third quarter were $146 million, an increase of 16 percent, or 15 percent in local currency. This growth was driven by increased market share in the Latin American and Asian markets. Gross margin on a non-GAAP basis in the third quarter decreased slightly to 40.2 percent. SG&A expense on a non-GAAP basis in the third quarter was $38 million compared to $32 million in the prior year. The increase was primarily due to expanded sales channel expense and increased marketing activities.
Professional Division Highlights
HARMAN sound systems were used at the recent GRAMMY® Awards, Super Bowl XLV, the Oscars®, the Country Music Awards, and the Indian National Games. JBL VerTec Subcompact Line Array speakers received the prestigious audio industry TEC Award at the January NAMM music dealers show. JBLs PRX600 powered speaker product line won the Music & Sound Retailer 2011 Readers Award for Best Speaker of 2010.
Notable installations during the quarter included the Houston Astros baseball stadium, Ontario, Canadas court houses, and the Dolphin Resort Hotel at Disney World.
6
Other (Corporate)
FY 2011 Key Figures Other | Three Months Ended March 31 | Nine Months Ended March 31 | ||||||||||||||||||||||||||||||
Increase (Decrease) |
Increase (Decrease) |
|||||||||||||||||||||||||||||||
$ millions | 3M FY11 |
3M FY10 |
Nominal | Local Currency1 |
9M FY11 |
9M FY10 |
Nominal | Local Currency1 |
||||||||||||||||||||||||
SG&A & Other |
20 | 16 | 23 | % | 23 | % | 62 | 48 | 30 | % | 30 | % | ||||||||||||||||||||
Restructuring-related costs |
0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||
Non-GAAP1 |
||||||||||||||||||||||||||||||||
SG&A & Other |
20 | 16 | 24 | % | 24 | % | 62 | 48 | 30 | % | 30 | % |
1 | A non-GAAP measure, see reconciliations of non-GAAP measures later in this release. |
SG&A expense increased in the third quarter primarily due to investments in corporate technology, innovation and marketing programs. The Companys Corporate Technology Center (CTC) is driving cutting-edge development in connectivity and networking, mobile Internet (Aha Radio), cloud computing, advanced driver assistance, wireless technologies, and energy-efficiency.
7
Harman International Industries, Incorporated
Consolidated Statements of Operations
Three Months Ended March 31, |
Nine Months Ended March 31, |
|||||||||||||||
(In thousands, except earnings per share data; unaudited) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Net sales |
$ | 948,196 | $ | 837,011 | $ | 2,741,223 | $ | 2,513,712 | ||||||||
Cost of sales |
699,371 | 619,379 | 1,999,087 | 1,852,218 | ||||||||||||
Gross profit |
248,825 | 217,632 | 742,136 | 661,494 | ||||||||||||
Selling, general and administrative expenses |
211,362 | 190,748 | 594,108 | 576,055 | ||||||||||||
Loss on deconsolidation of variable interest entity |
0 | 0 | 0 | 13,122 | ||||||||||||
Sale of Intellectual Property |
(16,184 | ) | 0 | (16,184 | ) | 0 | ||||||||||
Goodwill impairment |
0 | 0 | 0 | 12,292 | ||||||||||||
Operating income |
53,647 | 26,884 | 164,212 | 60,025 | ||||||||||||
Other expenses: |
||||||||||||||||
Interest expense, net |
5,262 | 5,762 | 17,172 | 23,950 | ||||||||||||
Miscellaneous, net |
1,464 | 1,572 | 5,396 | 3,719 | ||||||||||||
Income from continuing operations before taxes |
46,921 | 19,550 | 141,644 | 32,356 | ||||||||||||
Income tax expense |
10,321 | 4,629 | 24,604 | 10,326 | ||||||||||||
Income from continuing operations net of taxes |
36,600 | 14,921 | 117,040 | 22,030 | ||||||||||||
Income from discontinued operations net of taxes |
0 | 3,339 | 0 | 8,145 | ||||||||||||
Net income |
36,600 | 18,260 | 117,040 | 30,175 | ||||||||||||
Less: Net income attributable to non-controlling interest |
0 | 0 | 0 | 5,289 | ||||||||||||
Net income attributable to Harman International Industries, Incorporated |
$ | 36,600 | $ | 18,260 | $ | 117,040 | $ | 24,886 | ||||||||
Net income from continuing operations attributable to Harman International Industries, Incorporated: |
||||||||||||||||
Income from continuing operations, net of taxes |
$ | 36,600 | $ | 14,921 | $ | 117,040 | $ | 22,030 | ||||||||
Less: Net income attributable to non-controlling interest |
0 | 0 | 0 | 5,289 | ||||||||||||
Net income from continuing operations attributable to Harman International Industries, Incorporated |
$ | 36,600 | $ | 14,921 | $ | 117,040 | $ | 16,741 | ||||||||
Earnings per share from continuing operations attributable to Harman International Industries, Incorporated: |
||||||||||||||||
Basic |
$ | 0.51 | $ | 0.21 | $ | 1.65 | $ | 0.24 | ||||||||
Diluted |
$ | 0.51 | $ | 0.21 | $ | 1.64 | $ | 0.24 | ||||||||
Earnings per share from discontinued operations: |
||||||||||||||||
Basic |
$ | 0.00 | $ | 0.05 | $ | 0.00 | $ | 0.12 | ||||||||
Diluted |
$ | 0.00 | $ | 0.05 | $ | 0.00 | $ | 0.12 | ||||||||
Earnings per share: |
||||||||||||||||
Basic |
$ | 0.51 | $ | 0.26 | $ | 1.65 | $ | 0.35 | ||||||||
Diluted |
$ | 0.51 | $ | 0.26 | $ | 1.64 | $ | 0.35 | ||||||||
Weighted average shares outstanding: |
||||||||||||||||
Basic |
71,123 | 70,531 | 70,918 | 70,300 | ||||||||||||
Diluted |
71,924 | 70,905 | 71,541 | 70,536 |
8
Harman International Industries, Incorporated
Consolidated Balance Sheets
(In thousands; unaudited) | March 31, 2011 |
June 30, 2010 |
||||||
ASSETS |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 426,696 | $ | 645,570 | ||||
Short-term investments |
340,777 | 0 | ||||||
Accounts receivable |
599,969 | 517,092 | ||||||
Inventories |
455,070 | 353,123 | ||||||
Other current assets |
183,539 | 158,194 | ||||||
Total current assets |
2,006,051 | 1,673,979 | ||||||
Property, plant and equipment |
446,579 | 421,949 | ||||||
Goodwill |
116,366 | 105,922 | ||||||
Deferred tax assets, long term |
242,750 | 247,602 | ||||||
Other assets |
129,504 | 106,763 | ||||||
Total assets |
$ | 2,941,250 | $ | 2,556,215 | ||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||
Current liabilities |
||||||||
Current portion of long-term debt |
$ | 960 | $ | 463 | ||||
Short-term debt |
2,073 | 13,472 | ||||||
Accounts payable |
428,395 | 382,985 | ||||||
Accrued liabilities |
425,732 | 363,261 | ||||||
Accrued warranties |
110,768 | 99,329 | ||||||
Income taxes payable |
14,821 | 3,941 | ||||||
Total current liabilities |
982,749 | 863,451 | ||||||
Convertible senior notes |
374,485 | 362,693 | ||||||
Other senior debt |
486 | 1,209 | ||||||
Other non-current liabilities |
230,381 | 193,970 | ||||||
Total liabilities |
1,588,101 | 1,421,323 | ||||||
Total equity |
1,353,149 | 1,134,892 | ||||||
Total liabilities and equity |
$ | 2,941,250 | $ | 2,556,215 | ||||
9
Harman International Industries, Incorporated
Reconciliation of GAAP to Non-GAAP Results
Three Months Ended March 31, 2011 |
||||||||||||
(In thousands, except earnings per share data; unaudited) | GAAP | Adjustments | Non-GAAP | |||||||||
Net sales |
$ | 948,196 | $ | 0 | $ | 948,196 | ||||||
Cost of sales |
699,371 | (1,319 | )a | 698,052 | ||||||||
Gross profit |
248,825 | 1,319 | 250,144 | |||||||||
Selling, general and administrative expenses |
211,362 | (8,220 | )b | 203,142 | ||||||||
Loss on deconsolidation of variable interest entity |
0 | 0 | 0 | |||||||||
Sale of Intellectual Property |
(16,184 | ) | 0 | (16,184 | ) | |||||||
Goodwill impairment |
0 | 0 | 0 | |||||||||
Operating income |
53,647 | 9,539 | 63,186 | |||||||||
Other expenses: |
||||||||||||
Interest expense, net |
5,262 | 0 | 5,262 | |||||||||
Miscellaneous, net |
1,464 | 0 | 1,464 | |||||||||
Income from continuing operations before taxes |
46,921 | 9,539 | 56,460 | |||||||||
Income tax expense |
10,321 | 2,762 | c | 13,083 | ||||||||
Income from continuing operations net of taxes |
36,600 | 6,777 | 43,377 | |||||||||
Less: Net income attributable to non-controlling interest |
0 | 0 | 0 | |||||||||
Net income from continuing operations attributable to Harman International Industries, Incorporated |
$ | 36,600 | $ | 6,777 | $ | 43,377 | ||||||
Earnings per share from continuing operations attributable to Harman International Industries, Incorporated: |
||||||||||||
Basic |
$ | 0.51 | $ | 0.10 | $ | 0.61 | ||||||
Diluted |
$ | 0.51 | $ | 0.09 | $ | 0.60 | ||||||
Weighted average shares outstanding: |
||||||||||||
Basic |
71,123 | 71,123 | ||||||||||
Diluted |
71,924 | 71,924 |
(a) | Restructuring expense in Cost of Sales was $1.3 million due to projects to increase efficiency in manufacturing. |
(b) | Restructuring expense in SG&A was $8.2 million due to projects to increase efficiency in engineering and administrative functions. |
(c) | The tax benefits are calculated by multiplying the actual restructuring charge in each individual country by the discrete tax rate within that specific country. |
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 non-recurring charges. 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 consolidated financial statements prepared in accordance with US GAAP.
10
Harman International Industries, Incorporated
Reconciliation of GAAP to Non-GAAP Results
Nine Months Ended March 31, 2011 |
||||||||||||
(In thousands, except earnings per share data; unaudited) | GAAP | Adjustments | Non-GAAP | |||||||||
Net sales |
$ | 2,741,223 | $ | 0 | $ | 2,741,223 | ||||||
Cost of sales |
1,999,087 | (2,371 | )a | 1,996,716 | ||||||||
Gross profit |
742,136 | 2,371 | 744,507 | |||||||||
Selling, general and administrative expenses |
594,108 | (9,344 | )b | 584,764 | ||||||||
Loss on deconsolidation of variable interest entity |
0 | 0 | 0 | |||||||||
Sale of Intellectual Property |
(16,184 | ) | 0 | (16,184 | ) | |||||||
Goodwill impairment |
0 | 0 | 0 | |||||||||
Operating income |
164,212 | 11,715 | 175,927 | |||||||||
Other expenses: |
||||||||||||
Interest expense, net |
17,172 | 0 | 17,172 | |||||||||
Miscellaneous, net |
5,396 | 0 | 5,396 | |||||||||
Income from continuing operations before taxes |
141,644 | 11,715 | 153,359 | |||||||||
Income tax expense |
24,604 | 3,832 | c | 28,436 | ||||||||
Income from continuing operations net of taxes |
117,040 | 7,883 | 124,923 | |||||||||
Less: Net income attributable to non-controlling interest |
0 | 0 | 0 | |||||||||
Net income from continuing operations attributable to Harman International Industries, Incorporated |
$ | 117,040 | $ | 7,883 | $ | 124,923 | ||||||
Earnings per share from continuing operations attributable to Harman International Industries, Incorporated: |
||||||||||||
Basic |
$ | 1.65 | $ | 0.11 | $ | 1.76 | ||||||
Diluted |
$ | 1.64 | $ | 0.11 | $ | 1.75 | ||||||
Weighted average shares outstanding: |
||||||||||||
Basic |
70,918 | 70,918 | ||||||||||
Diluted |
71,541 | 71,541 |
(a) | Restructuring expense in Cost of Sales was $2.4 million due to projects to increase efficiency in manufacturing. |
(b) | Restructuring expense in SG&A was $9.3 million due to projects to increase efficiency in engineering and administrative functions. |
(c) | The tax benefits are calculated by multiplying the actual restructuring charge in each individual country by the discrete tax rate within that specific country. |
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 non-recurring charges. 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 consolidated financial statements prepared in accordance with US GAAP.
11
Harman International Industries, Incorporated
Reconciliation of GAAP to Non-GAAP Results
Three Months Ended March 31, 2010 |
||||||||||||
(In thousands, except earnings per share data; unaudited) | GAAP | Adjustments | Non-GAAP | |||||||||
Net sales |
$ | 837,011 | $ | 0 | $ | 837,011 | ||||||
Cost of sales |
619,379 | (880 | )a | 618,499 | ||||||||
Gross profit |
217,632 | 880 | 218,512 | |||||||||
Selling, general and administrative expenses |
190,748 | (5,036 | )b | 185,712 | ||||||||
Loss on deconsolidation of variable interest entity |
0 | 0 | 0 | |||||||||
Sale of Intellectual Property |
0 | 0 | 0 | |||||||||
Goodwill impairment |
0 | 0 | 0 | |||||||||
Operating income |
26,884 | 5,916 | 32,800 | |||||||||
Other expenses: |
||||||||||||
Interest expense, net |
5,762 | 0 | 5,762 | |||||||||
Miscellaneous, net |
1,572 | 0 | 1,572 | |||||||||
Income from continuing operations before taxes |
19,550 | 5,916 | 25,466 | |||||||||
Income tax expense |
4,629 | 1,877 | c | 6,506 | ||||||||
Income from continuing operations net of taxes |
14,921 | 4,039 | 18,960 | |||||||||
Less: Net income attributable to non-controlling interest |
0 | 0 | 0 | |||||||||
Net income from continuing operations attributable to Harman International Industries, Incorporated |
$ | 14,921 | $ | 4,039 | $ | 18,960 | ||||||
Earnings per share from continuing operations attributable to Harman International Industries, Incorporated: |
||||||||||||
Basic |
$ | 0.21 | $ | 0.06 | $ | 0.27 | ||||||
Diluted |
$ | 0.21 | $ | 0.06 | $ | 0.27 | ||||||
Weighted average shares outstanding: |
||||||||||||
Basic |
70,531 | 70,531 | ||||||||||
Diluted |
70,905 | 70,905 |
(a) | Restructuring expense in Cost of Sales was $0.9 million due to projects to increase efficiency in manufacturing. |
(b) | Restructuring expense in SG&A was $5.0 million due to projects to increase efficiency in engineering and administrative functions. |
(c) | The tax benefits are calculated by multiplying the actual restructuring charge in each individual country by the discrete tax rate within that specific country. |
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 non-recurring charges. 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 consolidated financial statements prepared in accordance with US GAAP.
12
Harman International Industries, Incorporated
Reconciliation of GAAP to Non-GAAP Results
Nine Months Ended March 31, 2010 |
||||||||||||
(In thousands, except earnings per share data; unaudited) | GAAP | Adjustments | Non-GAAP | |||||||||
Net sales |
$ | 2,513,712 | $ | 0 | $ | 2,513,712 | ||||||
Cost of sales |
1,852,218 | (4,253 | )a | 1,847,965 | ||||||||
Gross profit |
661,494 | 4,253 | 665,747 | |||||||||
Selling, general and administrative expenses |
576,055 | (9,440 | )b | 566,615 | ||||||||
Loss on deconsolidation of variable interest entity |
13,122 | 0 | 13,122 | |||||||||
Sale of Intellectual Property |
0 | 0 | 0 | |||||||||
Goodwill impairment |
12,292 | (12,292 | )c | 0 | ||||||||
Operating income |
60,025 | 25,985 | 86,010 | |||||||||
Other expenses: |
||||||||||||
Interest expense, net |
23,950 | 0 | 23,950 | |||||||||
Miscellaneous, net |
3,719 | 0 | 3,719 | |||||||||
Income from continuing operations before taxes |
32,356 | 25,985 | 58,341 | |||||||||
Income tax expense |
10,326 | 3,977 | d | 14,303 | ||||||||
Income from continuing operations net of taxes |
22,030 | 22,008 | 44,038 | |||||||||
Less: Net income attributable to non-controlling interest |
5,289 | 0 | 5,289 | |||||||||
Net income from continuing operations attributable to Harman International Industries, Incorporated |
$ | 16,741 | $ | 22,008 | $ | 38,749 | ||||||
Earnings per share from continuing operations attributable to Harman International Industries, Incorporated: |
||||||||||||
Basic |
$ | 0.24 | $ | 0.31 | $ | 0.55 | ||||||
Diluted |
$ | 0.24 | $ | 0.31 | $ | 0.55 | ||||||
Weighted average shares outstanding: |
||||||||||||
Basic |
70,300 | 70,300 | ||||||||||
Diluted |
70,536 | 70,536 |
(a) | Restructuring expense in Cost of Sales was $4.3 million due to projects to increase efficiency in manufacturing. |
(b) | Restructuring expense in SG&A was $9.4 million due to projects to increase efficiency in engineering and administrative functions. |
(c) | Goodwill impairment charge was $12.3 million. |
(d) | The tax benefits are calculated by multiplying the actual restructuring charge in each individual country by the discrete tax rate within that specific country. |
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 non-recurring charges. 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 consolidated financial statements prepared in accordance with US GAAP.
13
Harman International Industries, Incorporated
Reconciliation of GAAP to Non-GAAP Results
Foreign Currency Translation Impact
Three Months Ended March 31, |
Increase (Decrease) |
|||||||||||
(In thousands; unaudited) | 2011 | 2010 | ||||||||||
Net sales nominal currency |
$ | 948,196 | $ | 837,011 | 13 | % | ||||||
Effect of foreign currency translation1 |
(823 | ) | ||||||||||
Net sales - local currency |
948,196 | 836,188 | 13 | % | ||||||||
Gross profit nominal currency |
248,825 | 217,632 | 14 | % | ||||||||
Effect of foreign currency translation1 |
165 | |||||||||||
Gross profit local currency |
248,825 | 217,797 | 14 | % | ||||||||
SG&A & Other nominal currency |
195,178 | 190,748 | 2 | % | ||||||||
Effect of foreign currency translation1 |
(539 | ) | ||||||||||
SG&A & Other local currency |
195,178 | 190,209 | 3 | % | ||||||||
Operating income nominal currency |
53,647 | 26,884 | 100 | % | ||||||||
Effect of foreign currency translation1 |
704 | |||||||||||
Operating income local currency |
53,647 | 27,588 | 95 | % |
1 | Impact of restating prior year results at current year foreign exchange rates. |
Harman International has provided a reconciliation of the non-GAAP measures in the table above to provide the users of the financial statements with a better understanding of the Companys performance. Because changes in currency exchange rates affect our reported financial results, we show the rates of change both including and excluding the effect of these changes in exchange rates. We encourage readers of our financial statements to evaluate our financial performance excluding the impact of foreign currency translation. These non-GAAP measures are not measurements under accounting principles generally accepted in the United States. This measurement should be considered in addition to, but not as a substitute for, the information contained in our consolidated financial statements prepared in accordance with US GAAP.
14
Harman International Industries, Incorporated
Reconciliation of GAAP to Non-GAAP Results
Foreign Currency Translation Impact
EXCLUDING restructuring and goodwill charges | Three Months Ended March 31, |
Increase (Decrease) |
||||||||||
(In thousands; unaudited) | 2011 | 2010 | ||||||||||
Net sales nominal currency |
$ | 948,196 | $ | 837,011 | 13 | % | ||||||
Effect of foreign currency translation1 |
(823 | ) | ||||||||||
Net sales local currency |
948,196 | 836,188 | 13 | % | ||||||||
Gross profit - nominal currency |
250,144 | 218,512 | 15 | % | ||||||||
Effect of foreign currency translation1 |
167 | |||||||||||
Gross profit - local currency |
250,144 | 218,679 | 14 | % | ||||||||
SG&A & Other nominal currency |
186,958 | 185,712 | 1 | % | ||||||||
Effect of foreign currency translation1 |
(594 | ) | ||||||||||
SG&A & Other local currency |
186,958 | 185,118 | 1 | % | ||||||||
Operating income nominal currency |
63,186 | 32,800 | 93 | % | ||||||||
Effect of foreign currency translation1 |
761 | |||||||||||
Operating income local currency |
63,186 | 33,561 | 88 | % |
1 | Impact of restating prior year results at current year foreign exchange rates. |
Harman International has provided a reconciliation of the non-GAAP measures in the table above to provide the users of the financial statements with a better understanding of the Companys performance. Because changes in currency exchange rates affect our reported financial results, we show the rates of change both including and excluding the effect of these changes in exchange rates. We encourage readers of our financial statements to evaluate our financial performance excluding the impact of foreign currency translation. These non-GAAP measures are not measurements under accounting principles generally accepted in the United States. This measurement should be considered in addition to, but not as a substitute for, the information contained in our consolidated financial statements prepared in accordance with US GAAP.
15
Harman International Industries, Incorporated
Reconciliation of GAAP to Non-GAAP Results
Foreign Currency Translation Impact
Nine Months Ended March 31, |
Increase (Decrease) |
|||||||||||
(In thousands; unaudited) | 2011 | 2010 | ||||||||||
Net sales nominal currency |
$ | 2,741,223 | $ | 2,513,712 | 9 | % | ||||||
Effect of foreign currency translation1 |
(89,081 | ) | ||||||||||
Net sales - local currency |
2,741,223 | 2,424,631 | 13 | % | ||||||||
Gross profit nominal currency |
742,136 | 661,494 | 12 | % | ||||||||
Effect of foreign currency translation1 |
(20,425 | ) | ||||||||||
Gross profit local currency |
742,136 | 641,069 | 16 | % | ||||||||
SG&A & Other nominal currency |
577,924 | 601,469 | (4 | %) | ||||||||
Effect of foreign currency translation1 |
(22,017 | ) | ||||||||||
SG&A & Other local currency |
577,924 | 579,452 | 0 | % | ||||||||
Operating income nominal currency |
164,212 | 60,025 | 174 | % | ||||||||
Effect of foreign currency translation1 |
1,592 | |||||||||||
Operating income local currency |
164,212 | 61,617 | 167 | % |
1 | Impact of restating prior year results at current year foreign exchange rates. |
Harman International has provided a reconciliation of the non-GAAP measures in the table above to provide the users of the financial statements with a better understanding of the Companys performance. Because changes in currency exchange rates affect our reported financial results, we show the rates of change both including and excluding the effect of these changes in exchange rates. We encourage readers of our financial statements to evaluate our financial performance excluding the impact of foreign currency translation. These non-GAAP measures are not measurements under accounting principles generally accepted in the United States. This measurement should be considered in addition to, but not as a substitute for, the information contained in our consolidated financial statements prepared in accordance with US GAAP.
16
Harman International Industries, Incorporated
Reconciliation of GAAP to Non-GAAP Results
Foreign Currency Translation Impact
EXCLUDING restructuring and goodwill charges | Nine Months Ended March 31, |
Increase (Decrease) |
||||||||||
(In thousands; unaudited) | 2011 | 2010 | ||||||||||
Net sales nominal currency |
$ | 2,741,223 | $ | 2,513,712 | 9 | % | ||||||
Effect of foreign currency translation1 |
(89,081 | ) | ||||||||||
Net sales local currency |
2,741,223 | 2,424,631 | 13 | % | ||||||||
Gross profit - nominal currency |
744,507 | 665,747 | 12 | % | ||||||||
Effect of foreign currency translation1 |
(20,721 | ) | ||||||||||
Gross profit - local currency |
744,507 | 645,026 | 15 | % | ||||||||
SG&A & Other nominal currency |
568,580 | 579,737 | (2 | %) | ||||||||
Effect of foreign currency translation1 |
(21,540 | ) | ||||||||||
SG&A & Other local currency |
568,580 | 558,197 | 2 | % | ||||||||
Operating income nominal currency |
175,928 | 86,010 | 105 | % | ||||||||
Effect of foreign currency translation1 |
819 | |||||||||||
Operating income local currency |
175,928 | 86,829 | 103 | % |
1 | Impact of restating prior year results at current year foreign exchange rates. |
Harman International has provided a reconciliation of the non-GAAP measures in the table above to provide the users of the financial statements with a better understanding of the Companys performance. Because changes in currency exchange rates affect our reported financial results, we show the rates of change both including and excluding the effect of these changes in exchange rates. We encourage readers of our financial statements to evaluate our financial performance excluding the impact of foreign currency translation. These non-GAAP measures are not measurements under accounting principles generally accepted in the United States. This measurement should be considered in addition to, but not as a substitute for, the information contained in our consolidated financial statements prepared in accordance with US GAAP.
17
Harman International Industries, Incorporated
Total Liquidity Reconciliation
Total Company Liquidity | As of March 31, 2011 |
|||
$ millions |
||||
Cash & cash equivalents |
$ | 427 | ||
Short-term investments |
341 | |||
Available credit under Revolving Credit Facility |
543 | |||
Total liquidity |
$ | 1,311 |
18
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