Harman International Reports Record First Quarter Results

WASHINGTON--Harman International Industries, Incorporated today announced record results for the first quarter ended September 30, 2006. Net sales for the three months were $825.5 million, a 9 percent increase compared to last year. Operating income for the quarter increased 11 percent to $86.9 million. Earnings per diluted share were $0.85 compared to $0.79 during the same period last year, an increase of 8 percent.

Automotive sales for the first quarter were $601.0 million, an increase of 16 percent versus the same period a year ago. Professional sales increased 7 percent to $131.4 million. Consumer sales were $93.1 million compared to $111.4 million during the same quarter last year.

Dr. Sidney Harman, Executive Chairman, and Bernard Girod, Vice Chairman and Chief Executive Officer, commented:

“We achieved record results during the first quarter of fiscal 2007. Automotive performed very well while continuing to make substantial investments in infotainment systems development. Professional’s strong quarter is indicative of increasing market acceptance of the new products integrating the HiQnet protocol. First quarter results for the Consumer Group were below expectations. However, we expect the group to return to solid profitability in the second quarter.

We reiterate our expectation for earnings of $4.35 per diluted share in fiscal 2007.”

At 4:30 p.m. EDT today, Harman International will host an analyst and investor conference call to discuss the results for the three months ended September 30, 2006 and to offer management’s outlook for future periods. To participate in the conference call, please dial (800) 230-1093 or for international calls dial (612) 288-0340 prior to 4:30 p.m. EDT. Please let the operator know that you would like to join the Harman International call.

A replay of the conference call will be available following the completion of the call at approximately 8:00 p.m. EDT. The replay will be available through November 1, 2006. Please call (800) 475-6701 to access the replay. For international calls please call (320) 365-3844. The access code number is 845306.

AT&T will also be web-casting the presentation. The web-cast can be accessed at http://65.197.1.5/att/confcast, enter the Conference ID: 845306, then enter a pass code: Harman and click Go. There will also be a link to the web-cast at www.harman.com. Participation through the web-cast will be in listen-only mode.

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

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

HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(000s omitted except per share amounts)
		Three Months Ended
		September 30,
			2006			2005
Net sales		$	825,543		$	754,648
Cost of sales			538,254			488,353
Gross profit			287,289			266,295
Selling, general and administrative expenses			200,371			188,102
Operating income			86,918			78,193
Other expense:
Interest expense, net			139			3,839
Miscellaneous, net			861			614
Income before income taxes			85,918			73,740
Income tax expense			29,635			19,773
Minority interest			(325)			0
Net income		$	56,608		$	53,967
Basic earnings per share		$	0.86		$	0.82
Diluted earnings per share		$	0.85		$	0.79
Shares outstanding - basic			65,517			66,117
Shares outstanding - diluted			66,676			68,477

HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(000s omitted)
		September 30,			September 30,
			2006			2005
ASSETS
Current assets
Cash and cash equivalents		$	134,983		$	278,917
Accounts receivable			461,004			428,683
Inventories			379,299			331,710
Other current assets			179,915			158,767
Total current assets			1,155,201			1,198,077
Property, plant and equipment			501,448			482,133
Goodwill			381,517			348,141
Other assets			197,532			162,743
Total assets		$	2,235,698		$	2,191,094
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term borrowings		$	2,786		$	2,170
Current portion of long-term debt			16,989			2,969
Accounts payable and accrued liabilities			774,257			687,198
Total current liabilities			794,032			692,337
Long-term debt			153,025			389,508
Other non-current liabilities			77,851			71,011
Total shareholders' equity			1,210,790			1,038,238
Total liabilities and shareholders' equity		$	2,235,698		$	2,191,094