Harman International Industries, Inc. Reports First Quarter Earnings
28 October 1999
Harman International Industries, Inc. Reports First Quarter Earnings
WASHINGTON--Oct. 27, 1999--Harman International today announced that sales for its first quarter ended September 30, 1999 increased 13 percent to $356.8 million. Excluding currency effects, sales increased 16 percent.Net income totaled $4.9 million. Earnings per share were $0.28, exceeding the Company's forecast of $0.25. Earnings per share in the same quarter last year were $0.45.
The Consumer Systems Group reported sales of $254.5 million for the quarter, a 17 percent increase over the prior year. Sales to consumer audio dealers and distributors equaled last year's first quarter, reflecting higher North American volumes and lower international sales due to the Company's international dealer destocking program. Sales to automakers increased.
Strong growth in Infinity audio system shipments for the Jeep Grand Cherokee and higher volumes with Mitsubishi contributed in North America and Asia. In Europe, sales were driven by the introduction of navigation systems in Mercedes Benz vehicles and by robust aftermarket activity in Becker radios and navigation systems.
Sales to personal computer manufacturers increased substantially, reflecting higher shipments of Harman Kardon systems to Dell and Apple and higher shipments of JBL systems to Compaq.
At its launch of the new iMacs in California this month, Apple emphasized the significance of the Harman Kardon audio systems. And at the Tokyo auto show, Lexus demonstrated the powerful new Harman-Mark Levinson digital audio system in its new two-door coupe concept car.
The Professional Group reported sales of $102.3 million for the quarter, a 4 percent increase over the prior year. JBL Professional, Lexicon, and AKG all reported strong sales growth. A major new OEM supply contract with Qualcomm contributed to the growth at AKG.
Operating expenses increased over the prior year due principally to the shift in business emphasis to OEM. Major engineering, development and capital outlays were required to fulfill future automotive and personal computer contracts. Certain of these future contracts have not yet been disclosed to respect our customers' requests for confidentiality.
The Company continued its solid cash flow performance. September 1999 inventories of $296 million were 14%, or nearly $50 million, below September 1998 levels. Although share repurchases in the 12 months ended September 1999 totaled $35 million (including $22 million since June 1999) the Company's total debt decreased by $60 million over the same period.
Commenting on the results, Dr. Sidney Harman, Chairman, stated: "The Company performed well in the first quarter. It produced solid sales and exceeded the third of our earnings milestones. We expect attractive sales and earnings growth through the balance of the year as our presence in the automotive and personal computer audio markets continues to grow and DVD's accelerating momentum fuels sales of our updated home theater electronics and loudspeaker lines."
Bernard Girod, Chief Executive Officer, said: "Our operating units executed very effectively in the first quarter. We are pleased with the performance. Our investments in research and development and infrastructure improvements position the Company well for the quarters ahead."
Harman International Industries, Incorporated (www.harman.com) is a leading manufacturer of high-quality, high-fidelity audio and video products for the 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 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, currency exchange rates, labor disputes, competitive products and other risks detailed in the Company's Securities and Exchange Commission filings.
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED FIRST QUARTER
RESULTS - FISCAL 2000 FOR THE THREE MONTHS ENDED September 30, 1999
and 1998 (000s omitted except per share amounts)
Three Months Ended
September 30,
1999 1998
------ ------
Net sales $356,773 $315,896
Cost of sales 260,530 232,161
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Gross profit 96,243 83,735
Selling, general and administrative expenses 83,926 65,406
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Operating income 12,317 18,329
Other expense (income):
Interest expense 4,630 5,933
Miscellaneous, net 594 90
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Income before income taxes 7,093 12,306
Income tax expense 2,199 3,815
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Net income $ 4,894 $ 8,491
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Basic EPS $ 0.28 $ 0.46
Diluted EPS $ 0.28 $ 0.45
Shares outstanding - basic 17,479 18,578
Shares outstanding - diluted 17,698 18,738
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
CONSOLIDATED BALANCE SHEETS
(000s omitted)
September 30, September 30,
1999 1998
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ASSETS
Current assets
Cash and cash equivalents $ 11,729 $ 5,321
Accounts receivable 303,613 299,607
Inventories 296,180 344,637
Other current assets 58,459 82,815
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Total current assets 669,981 732,380
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Property, plant and equipment 231,131 259,213
Excess of cost over fair value of
assets acquired 143,077 169,661
Other assets 39,774 23,929
---------- ----------
Total assets $1,083,963 $1,185,183
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term borrowings $ 12,117 $ 20,640
Current portion of long-term
debt 11,165 56,243
Accounts payable and accrued
liabilities 239,678 228,803
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Total current liabilities 262,960 305,686
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Long-term debt 331,201 337,541
Other non-current liabilities 30,708 33,204
Minority interest 780 697
Total shareholders' equity 458,314 508,055
---------- ----------
Total liabilities and shareholders'
equity $1,083,963 $1,185,183
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