-----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, KfXha6E4xeZkbmBGe7e20vGDisBqqbEfy7gsYASqcrvFM5ZNWCUE1CiUqUrBEc8D KFWkWJKcF//8tRTVqGplBg== 0000800459-96-000001.txt : 19960216 0000800459-96-000001.hdr.sgml : 19960216 ACCESSION NUMBER: 0000800459-96-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960213 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: 96516500 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, 1995 Commission File Number: 1-9764 HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED - ------------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) DELAWARE 11-2534306 - ---------------------------------- -------------------------------------- (State or other jurisdiction (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. 16,307,192 shares of Common Stock, $.01 par value, at January 31, 1996. HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES INDEX PART I. FINANCIAL INFORMATION PAGE NO. Item 1. Financial Statements Condensed Consolidated Balance Sheets - December 31, 1995 and June 30, 1995 3 Condensed Consolidated Statements of Operations - Six months ended December 31, 1995 and 1994 4 Condensed Consolidated Statements of Cash Flows - Six months ended December 31, 1995 and 1994 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of the Results of Operations and Financial Condition 7-9 PART II. OTHER INFORMATION 10 SIGNATURES 12 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1995 AND JUNE 30, 1995 (000s omitted except per share amounts) (Unaudited) (Audited) 12/31/95 06/30/95 ASSETS --------------- --------------- Current Assets: Cash and short-term investments $ 12,356 $ 11,252 Receivables (less allowance for doubtful accounts: $12,402 at December 31, 1995, and $12,313 at June 30, 1995) 277,122 264,898 Inventories Finished goods and inventory purchased for resale 173,977 146,132 Work in process 28,752 28,412 Raw materials and supplies 78,348 61,988 --------------- --------------- Total inventories 281,077 236,532 Other current assets 47,431 39,973 --------------- --------------- Total current assets 617,986 552,655 Property, plant and equipment, net 196,230 189,823 Other assets 19,130 21,890 Excess of cost over fair value of assets acquired, net 125,456 122,504 --------------- --------------- Total assets $ 958,802 $ 886,872 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Notes payable $ 18,355 $ 27,208 Current portion of long-term debt 18,271 13,006 Accounts payable 89,609 90,755 Accrued liabilities 150,306 164,122 --------------- --------------- Total current liabilities 276,541 295,091 Other non-current liabilities 30,306 31,199 Borrowings under Revolving Credit Facility 183,078 106,244 Senior long-term debt 45,214 50,277 Subordinated long-term debt 109,800 109,500 Deferred income 432 1,082 Minority interest 3,966 3,989 Shareholders' Equity: Common stock, $0.01 par value 160 152 Additional paid-in capital 185,506 156,257 Equity adjustment from foreign currency translation 5,658 6,157 Retained earnings 118,141 126,924 --------------- --------------- Net shareholders' equity 309,465 289,490 Total liabilities and shareholders' equity $ 958,802 $ 886,872 ========= =========
See accompanying Notes to Condensed Consolidated Financial Statements. 3 HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 1995 AND 1994 (000s omitted except per share amounts) (UNAUDITED) Three Months Ended Six Months Ended December 31, December 31, 1995 1994 1995 1994 --------------- --------------- --------------- --------------- Net sales $ 348,669 $ 288,718 $ 649,143 $ 517,325 Cost of sales 240,754 197,881 451,742 350,622 --------------- --------------- --------------- --------------- Gross profit 107,915 90,837 197,401 166,703 Selling, general and administrative expenses 77,489 66,021 150,702 127,728 --------------- --------------- --------------- --------------- Operating income 30,426 24,816 46,699 38,975 Other expenses: Interest expense 7,538 6,173 14,475 11,909 Miscellaneous, net 590 93 865 1,411 --------------- --------------- --------------- --------------- Income before income taxes, minority interest and extraordinary items 22,298 18,550 31,359 25,655 Income tax expense 6,825 6,336 9,948 9,166 Minority interest 11 44 45 121 --------------- --------------- --------------- --------------- Income before extraordinary items 15,462 12,170 21,366 16,368 Extraordinary items, net of income taxes -- (226) -- (274) --------------- --------------- --------------- --------------- Net income $ 15,462 $ 11,944 $ 21,366 $ 16,094 ========= ========= ========= ========= Earnings per share of common stock before extraordinary items $ 0.95 $ 0.76 $ 1.31 $ 1.03 ========= ========= ========= ========= Earnings per common share$ 0.95 $ 0.75 $ 1.31 $ 1.02 ========= ========= ========= ========= Weighted average number of common shares outstanding 16,258 15,858 16,248 15,843 ========= ========= ========= ========= 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, 1995 AND 1994 ($000s omitted) (UNAUDITED) 1995 1994 --------------- --------------- Cash flows from operating activities: Net income $ 21,366 $ 16,094 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 24,953 18,647 Amortization of intangible assets 2,771 1,241 Amortization of deferred income (646) (647) Changes in assets and liabilities, net of effects from purchase of companies: (Increase) decrease in: Receivables (10,056) (3,405) Inventories (40,672) 13,995 Other current assets (2,700) (15,043) Increase (decrease) in: Accounts payable (1,996) (21,830) Accrued liabilities (14,530) (4,563) --------------- --------------- Total adjustments (42,876) (11,605) --------------- --------------- Net cash provided by (used in) operating activities $ (21,510) $ 4,489 --------------- --------------- Cash flow from investing activities: Payment for purchase of companies, net of cash acquired $ (11,064) $ (3,990) Proceeds from asset dispositions 171 -- Capital expenditures for property, plant and equipment (33,656) (21,539) Other items, net 185 (2,143) --------------- --------------- Net cash used in investing activities $ (44,364) $ (27,672) --------------- --------------- Cash flow from financing activities: Net borrowings under lines of credit $ (8,948) $ (42,758) Net proceeds from (repayments of) long-term debt 77,317 71,771 Dividends paid to stockholders (1,594) (1,207) Proceeds from exercise of stock options 702 592 Net change, foreign currency translation (499) (176) --------------- --------------- Net cash provided by financing activities $ 66,978 $ 28,222 --------------- --------------- Net increase (decrease) in cash and short-term investments 1,104 5,039 Cash and short-term investments at beginning of period 11,252 9,724 --------------- --------------- Cash and short-term investments at end of period $ 12,356 $ 14,763 ========= ========= Supplemental disclosures of cash flow information: Interest paid $ 12,629 $ 11,322 Income taxes paid $ 7,890 $ 12,519 Supplemental schedule of non-cash investing activities: Fair value of assets acquired $ 14,650 $ 2,493 Cash paid for the capital stock 11,757 422 --------------- --------------- Liabilities assumed $ 2,893 $ 2,071 --------------- --------------- 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, 1995 and 1994 have not been audited by the Company's independent auditors; however, in the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the consolidated financial position of the Company and subsidiaries as of December 31, 1995 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, 1995 are not necessarily indicative of the results to be expected for the full year. NOTE B - ACQUISITIONS On August 30, 1995, Harman International Industries, Incorporated, exercised its option to purchase the remaining 80% of the issued and outstanding shares of Madrigal Audio Laboratories, Inc. ("Madrigal"), increasing its ownership to 100%. Harman paid approximately $9.8 million for the remaining shares and related acquisition costs. Harman funded its acquisition of Madrigal utilizing its revolving credit facility. The results of operations for the six months ended December 31, 1995, include the results of Madrigal for July 1, 1995 through December 31, 1995, as the acquisition was made effective July 1, 1995. NOTE C - STOCK DIVIDEND In August 1995, the Company declared a special 5 percent stock dividend to stockholders of record on August 11, 1995, payable on August 25, 1995. Outstanding shares and earnings per share have been retroactively restated to give effect to the stock dividend. In accordance with ARB 43, the stock dividend was accounted for by transferring from retained earnings to the common stock and additional paid-in capital accounts an amount equal to the fair value of the additional shares issued. 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 AND SIX MONTH PERIODS ENDED DECEMBER 31, 1995 AND 1994 Net sales for the quarter ended December 31, 1995, totaled $348.7 million, a 21 percent increase over the comparable period in the prior year. For the first half of the year, sales increased 25 percent to $649.1 million. Excluding recent acquisitions which were not represented in the first six months of last year, sales increased 5 percent for the quarter and 8 percent for the first half. The Professional Group contributed higher sales for the second quarter and the first half. JBL Professional reported higher sales for the first half, driven in large part by the success of the EON product line. AKG produced excellent sales growth for the second quarter and the first half on the strength of new models of wireless microphones and headphones. The Consumer Group reported modestly higher sales for the second quarter and the first half despite weakness in the United States retail environment which adversely affected JBL and Infinity loudspeaker sales. Harman Kardon generated increased sales for the second quarter and the first half due to strong demand for the Citation line of home theater components and its expanded line of audio/video receivers. Sales of consumer electronics and loudspeakers in Europe were robust in the second quarter and the first half. The OEM Group (formerly the Automotive OEM Group) produced higher sales for the second quarter and the first half. Sales growth was partially attributable to Becker, which was not represented in the first half last year. Shipments of high fidelity systems for the Chrysler Minivan, Ford Explorer and the Jeep Grand Cherokee were vigorous. The success of the new Toyota Avalon, which features a high-end audio system supplied by the OEM Group, also contributed to the results. The name of the group has been changed to reflect its expanded mission to provide OEM audio products for additional markets, such as audio for computers. The gross profit margin for the quarter ended December 31, 1995, was 31.0 percent ($107.9 million) compared to 31.5 percent ($90.8 million) in the prior year. The gross profit margin for the first half of fiscal 1996 7 was 30.4 percent ($197.4 million) compared to 32.2 percent ($166.7 million) in the previous year. The decrease in the gross margin percentage in the quarter and the first half primarily reflects the inclusion of Becker. Operating income as a percentage of sales was 8.7 percent ($30.4 million) for the second quarter ended December 31, 1995, compared with 8.6 percent ($24.8 million) for the same period in the prior year. The increase for the second quarter results from reduced selling, general and administrative expenses as a percentage of sales. For the first half, operating income as a percentage of sales was 7.2 percent compared with 7.5 percent for the first half of fiscal 1995. The decrease reflects the inclusion of Becker, at essentially a break-even. Interest expense for the three months ended December 31, 1995, increased to $7.5 million from $6.2 million reported in the comparable period in the prior year due to higher average borrowings. For the six months ended December 31, 1995, interest expense was $14.5 million, up from $11.9 million for the six months ended December 31, 1994. Average borrowings outstanding were $366.8 million for the second quarter of fiscal 1996 and $343.1 million for the first half, up from $263.4 million and $252.5 million, respectively, for the same periods in the prior year. Higher average borrowings in fiscal 1996 result from the Becker and Madrigal acquisitions and the financing of increased working capital requirements. The impact of the increase in average borrowings on interest expense was partially offset by a substantial reduction in the average interest rate on borrowings. The average interest rate on borrowings was 8.2 percent for the second quarter and 8.4 percent for the six months ended December 31, 1995, down from 9.4 percent for both the second quarter and the six months ended December 31, 1994. The decrease in average interest rates results from generally lower market interest rates worldwide and the refinancing of unsecured lines of credit with a committed revolving credit facility agreement which was completed September 30, 1994. Interest expense as a percentage of sales was 2.2 percent for the first half of fiscal 1996, down from 2.3 percent for the comparable period in the previous year. Income before income taxes, minority interest and extraordinary items for the second quarter of fiscal 1996 was $22.3 million, up from $18.6 million in the previous year. For the six months ended December 31, 1995, income before income taxes, minority interest and extraordinary items increased to $31.4 million, compared with $25.7 million in the prior year period. 8 The effective tax rate for the second quarter of fiscal 1996 was 30.6 percent compared with 34.2 percent in the same period a year ago. The effective tax rate for the first half of fiscal 1996 was 31.7 percent compared with 35.7 percent in the prior year. The decrease in the effective tax rate for the quarter and the first half results from the restructuring of certain foreign subsidiaries to take advantage of prior years' tax losses. The Company calculates its effective tax rate based upon its best estimate of annual results. Net income for the three months ended December 31, 1995, was $15.5 million, or $0.95 per share, compared with $11.9 million, or $0.75 per share, in the previous year. Net income for the first half of fiscal 1996 was $21.4 million, or $1.31 per share, compared with $16.1 million, or $1.02 per share, in the previous year. Prior year earnings per share data has been restated to give effect to the special 5 percent stock dividend declared and paid in August 1995. FINANCIAL CONDITION - --------------------------------- Net working capital at December 31, 1995, was $341.4 million, compared with $257.6 million at June 30, 1995. Working capital increased to support higher sales volume than in the prior year and to reflect the acquisition of Madrigal. Additionally, finished goods inventories increased due to weaker than anticipated second quarter sales in the United States. Borrowings under the revolving credit facility at December 31, 1995, were $187.3 million, comprised of swing line borrowings of $4.2 million, which are included in notes payable, and competitive advance borrowings and revolving credit borrowings of $183.1 million. Borrowings under the revolving credit facility at June 30, 1995, were $115.9 million, comprised of swing line borrowings of $9.7 million and competitive advance borrowings and revolving credit borrowings of $106.2 million. Increased borrowings reflect the financing of capital expenditures, additional working capital requirements and the Madrigal acquisition. In the second quarter of fiscal 1996, the revolving credit facility was increased from $220 million to $275 million, and the maturity was extended one year to September 30, 2000. Accrued liabilities decreased $13.8 million, from $164.1 million to $150.3 million, primarily due to the funding of previously announced restructuring programs to enhance the productivity of recent acquisitions. 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 14, 1995. (b) Mr. Bernard A. Girod was re-elected as a director of the Company with 14,189,904 affirmative votes and 51,600 votes withholding authority. Mr. Girod will serve a three- year term expiring at the 1998 Annual Meeting of Stockholders. Ms. Ann McLaughlin was elected as a director of the Company with 14,236,113 affirmative votes and 5,391 votes withholding authority. Ms. McLaughlin will serve a three-year term expiring at the 1998 Annual Meeting of Stockholders. (c) The proposal to amend the 1992 Incentive Plan was approved with 12,791,781 affirmative votes, 1,429,716 negative votes and 20,007 votes withholding authority. 10 HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES PART II - OTHER INFORMATION (Continued) Item 5. Other Information 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. 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 13, 1995 BY: /s/ Sidney Harman ------------------------------- Sidney Harman Chairman and Chief Executive Officer DATE: February 13, 1995 BY: /s/ F. Gordon Bitter ------------------------------- F. Gordon Bitter Chief Financial Officer 12 EX-27 2 ART 5 FDC FOR 2ND QUARTER 10-Q
5 1000 6-MOS JUN-30-1996 DEC-31-1995 9542 2814 289524 12402 281077 617986 375494 179264 958802 276541 338092 0 0 160 309305 958802 649143 649143 369658 451742 0 1240 14475 31359 9948 21366 0 0 0 21366 1.31 1.31
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