Harman International Reports First Quarter Results

WASHINGTON--Harman International Industries, Incorporated today announced results for the first quarter ended September 30, 2007. Net sales for the three months were $947.0 million, a 15 percent increase compared to $825.5 million for the same period last year. Earnings per diluted share were $0.55 compared to $0.85 last year. Excluding merger-related costs, earnings per diluted share were $0.62.

All three divisions reported double-digit sales growth for the first quarter. Automotive net sales for the three months were $682.3 million compared to $601.0 million last year, an increase of 14 percent. Consumer net sales increased 28 percent from $93.1 million a year ago to $119.4 million this quarter. Professional net sales were $145.2 million compared to $131.4 million last year, an increase of 11 percent.

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

“We achieved good results during the first quarter of fiscal 2008. Sales growth was strong due to the ramp up of an infotainment system for Chrysler and robust sales of personal navigation devices in Europe. Our initiative to develop cost saving strategies is underway and we expect to gain procurement, engineering and manufacturing efficiencies that will improve margins over the course of this fiscal year.”

At 4:30 p.m. EDT today, Harman International will host an analyst and investor conference call to discuss the results for the three months ended September 30, 2007 and management’s outlook for future periods. To participate in the conference call, please dial (800) 230-1092 or for international calls dial (612) 234-9960 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 8, 2007. Please call (800) 475-6701 to access the replay. For international calls please call (320) 365-3844. The access code number is 891629.

AT&T will be web-casting the conference call. The web-cast can be accessed at http://65.197.1.5/att/confcast, enter the conference ID: 891629, then enter a passcode: 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 our ability to successfully develop and implement cost saving strategies and to gain procurement, engineering and manufacturing efficiencies to deliver improved margins, the effect of changes in consumer confidence, changes 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, including the litigation resulting from the terminated merger agreement with a company formed by investment funds affiliated with Kohlberg Kravis Roberts & Co. L.P. and GS Capital Partners VI Fund L.P., 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, including our Annual Report on Form 10-K for the fiscal year ended June 30, 2007.

HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (000s omitted except per share amounts) (unaudited)
	Three Months Ended September 30,
		2007			2006
Net sales		$	946,962		$	825,543
Cost of sales			682,387			538,254
Gross profit			264,575			287,289
Selling, general and administrative expenses			223,134			200,371
Operating income			41,441			86,918
Other expense:
Interest expense, net			1,410			139
Miscellaneous, net			671			861
Income before income taxes			39,360			85,918
Income tax expense			3,657			29,635
Minority interest			(826)			(325)
Net income		$	36,529		$	56,608
Basic earnings per share		$	0.56		$	0.86
Diluted earnings per share		$	0.55		$	0.85
Shares outstanding - basic			65,242			65,517
Shares outstanding - diluted			66,363			66,676

HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED GAAP CONDENSED CONSOLIDATED BALANCE SHEETS (000s omitted) (unaudited)
		September 30, 2007			September 30, 2006
ASSETS
Current assets
Cash and cash equivalents		$	77,126		$	134,983
Accounts receivable			580,167			461,004
Inventories			475,155			379,299
Other current assets			186,798			198,766
Total current assets			1,319,246			1,174,052
Property, plant and equipment			605,641			501,448
Goodwill			415,386			381,517
Other assets			281,554			201,084
Total assets		$	2,621,827		$	2,258,101
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term borrowings		$	0		$	2,786
Current portion of long-term debt			573			16,989
Accounts payable			325,676			251,672
Accrued liabilities			394,449			542,811
Total current liabilities			720,698			814,258
Borrowings under revolving credit facility			179,869			150,108
Long-term debt			2,591			2,917
Other non-current liabilities			142,559			80,028
Total shareholders' equity			1,576,110			1,210,790
Total liabilities and shareholders' equity		$	2,621,827		$	2,258,101

HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RECONCILIATION OF GAAP TO NON-GAAP RESULTS (000s omitted except per share amounts) (unaudited)
		Three-Months Ended September 30, 2007								2006
		GAAP			Adjustments			Non-GAAP		GAAP
Net sales		$	946,962		---			946,962		825,543
Cost of sales			682,387		---			682,387		538,254
Gross profit			264,575		---			264,575		287,289
Selling, general and Administrative expenses			223,134		(4,698)	(a)		218,436		200,371
Operating income			41,441		4,698			46,139		86,918
Other expenses:
Interest expense, net			1,410		---			1,410		139
Miscellaneous, net			671		---			671		861
Income before income taxes			39,360		4,698			44,058		85,918
Income tax expense			3,657		---			3,657		29,635
Minority interest			(826)		---			(826)		(325)
Net income		$	36,529		4,698			41,227		56,608
Basic earnings per share		$	0.56		0.07			0.63		0.86
Diluted earnings per share		$	0.55		0.07			0.62		0.85
Shares outstanding - Basic			65,242		65,242			65,242		65,517
Shares outstanding - Diluted			66,363		66,363			66,363		66,676

(a)

Merger costs, principally investment banking and professional fees, related to our transaction with affiliates of Kohlberg Kravis Roberts & Co. L.P. and GS Capital Partners were incurred during the first quarter in the amount of $4.7 million.

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 merger related costs incurred during the first quarter of fiscal 2008. These non-GAAP measures are not measurements under accounting principles generally accepted in the United States. These measurements should be considered in addition to, but not as a substitute for, the information contained in our financial statements prepared in accordance with GAAP.