HARMAN reports second quarter fiscal year 2014 results

• Net sales up 26% to $1.328 billion and non-GAAP EPS up 85% to $1.09
• Non-GAAP operating income up 90% to $108 million and generated $121 million cash from operations
• Raising full year revenue guidance from ~$4.7 billion to ~$5.1 billion and EPS from ~$3.85 to ~$4.16
• Secured $1.1 billion in new automotive awards

Harman International Industries, Incorporated, the leading global infotainment and audio group (NYSE:HAR), today announced results for the second quarter ended December 31, 2013.

Net sales for the second quarter were $1.328 billion, an increase of 26 percent compared to the same period last year as all three of the Company’s divisions reported increased sales. The strong sales increase was a result of several initiatives in each division in addition to improved economic conditions. Infotainment net sales increased due to the expansion of recent production launches and higher take rates. Lifestyle growth was primarily driven by new product launches, the impact of increased marketing investments in the home and multimedia business, and increased take rates in the car audio business. The Professional division reported strong growth as a result of the expansion of the Company’s product portfolio into lighting as well as increased demand for the Company’s audio products at live entertainment events and in fixed-installation venues.

On a GAAP basis, second quarter operating income was $102 million, compared to $68 million in the same period last year, and earnings per diluted share were $1.03 for the quarter compared to $0.68. Excluding restructuring and non-recurring charges, second quarter non-GAAP operating income was $108 million, compared to $57 million in the same period last year. On the same non-GAAP basis, earnings per diluted share were $1.09 for the quarter compared to $0.59 in the same period last year.

Dinesh C. Paliwal, the Company’s Chairman, President and CEO, said, “We are extremely pleased that for the second consecutive quarter all three of our divisions reported double-digit top-line growth, which also resulted in double-digit profitability improvement. We are confident that the momentum that we built in the first half of the fiscal year is sustainable and therefore we have increased our fiscal year guidance for revenue and EPS.”

Paliwal added, “We also continue to position HARMAN for long term growth with the introduction of proprietary technology solutions that enable safety, cyber security, and rapid app development for in-car systems. These critical and high demand features can only be provided through embedded infotainment systems. They are essential for leading automakers as evidenced by $2.7 billion in new automotive awards in the first half of the fiscal year. Our technologies were further validated with prestigious CES and Red Star innovation and product design awards, and a third technical GRAMMY® Award which we won this year for our Lexicon brand.”

FY 2014 Key Figures – Total Company			Three Months Ended December 31																Six Months Ended December 31
											Increase  (Decrease)																Increase  (Decrease)
$ millions (except per share data)			3M  FY14				3M  FY13				Including Currency Changes				Excluding Currency Changes1				6M  FY14				6M  FY13				Including Currency Changes				Excluding Currency Changes1
Net sales			1,328				1,056				26	%			23	%			2,500				2,054				22	%			19	%
Gross profit			379				272				40	%			38	%			701				550				27	%			25	%
Percent of net sales			28.6	%			25.7	%											28.0	%			26.8	%
SG&A & Other			278				203				36	%			34	%			530				403				32	%			29	%
Operating income			102				68				49	%			47	%			171				147				16	%			15	%
Percent of net sales			7.7	%			6.5	%											6.8	%			7.2	%
EBITDA			134				99				36	%			34	%			235				206				14	%			12	%
Percent of net sales			10.1	%			9.3	%											9.4	%			10.0	%
Net Income			72				47				51	%			48	%			118				102				16	%			13	%
Diluted earnings per share			1.03				0.68				51	%			48	%			1.69				1.47				15	%			13	%
Restructuring-related costs			6				(12	)											30				(11	)
Non-GAAP1
Gross profit			381				273				40	%			38	%			705				551				28	%			26	%
Percent of net sales			28.7	%			25.8	%											28.2	%			26.8	%
SG&A & Other			273				216				26	%			25	%			503				415				21	%			19	%
Operating income			108				57				90	%			88	%			201				136				48	%			46	%
Percent of net sales			8.1	%			5.4	%											8.0	%			6.6	%
EBITDA			139				86				61	%			59	%			262				194				35	%			33	%
Percent of net sales			10.5	%			8.2	%											10.5	%			9.4	%
Net Income			76				41				85	%			81	%			143				96				49	%			46	%
Diluted earnings per share			1.09				0.59				85	%			81	%			2.04				1.38				48	%			45	%
Shares outstanding – diluted (in millions)			70				70												70				70
1 A non-GAAP measure, see reconciliations of non-GAAP measures later in this release.

Summary of Operations – Gross Margin and SG&A

Non-GAAP gross margin for the second quarter of fiscal 2014 increased 284 basis points to 28.7 percent. The improvement was primarily due to the impact of higher sales volume on fixed production costs, reduced costs due to productivity initiatives and favorable product mix.

SG&A and Other expense as a percentage of net sales on a non-GAAP basis in the second quarter of fiscal 2014 was 20.6 percent, in line with the prior year.

2014 Outlook

HARMAN today raised its financial outlook for fiscal 2014. The Company now forecasts global revenue of ~$5.1 billion and operational earnings per share of ~$4.16. Details by division are provided below.

–January 30, 2014 Revised Guidance —

Fiscal Year 2014

HARMAN

Infotainment Division

Lifestyle Division

Professional Division

Sales

~$5.100 billion

~$2.715 billion

~$1.560 billion

~$825 million

EBITDA*

~$535 million

~$295 million

~$220 million

~$140 million

EPS*

~$4.16

–August 8, 2013 Guidance–

Fiscal Year 2014

HARMAN

Infotainment Division

Lifestyle Division

Professional Division

Sales

~$4.700 billion

~$2.460 billion

~$1.425 billion

~$815 million

EBITDA*

~$490 million

~$260 million

~$200 million

~$135 million

EPS*

~$3.85

*Non-GAAP, excluding restructuring and non-recurring items

Investor Call Today, January 30, 2014

At 11:00 a.m. EST today, Harman’s management will host an analyst and investor conference call to discuss the second quarter results. Those who want to participate via audio in the earnings conference call should dial 1 (800) 923 9042 (U.S.) or +1 (212) 231 2909 (International) ten minutes before the call and reference HARMAN, Access Code: 21703048.

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 second quarter earnings release and supporting materials were posted on the site at approximately 8:00 a.m. EST, Thursday, January 30, 2014.

A replay of the call will also be available following its completion at approximately 1:00 p.m. EST. The replay will be available through April 30, 2014 at 1:00 p.m. EST. To listen to the replay, dial 1 (800) 633 8284 (U.S.) or +1 (402) 977 9140 (International), Access Code: 21703048. If you need technical assistance, call the toll-free Global Crossing Customer Care Line at 1 (800) 473 0602 (U.S.) or +1 (303) 446 4604 (International).

General Information

HARMAN designs, manufactures, and markets a wide range of infotainment and audio solutions for the automotive, consumer, and professional markets. It is a recognized world leader across its customer segments with premium brands including AKG®, Harman Kardon®, Infinity®, JBL®, Lexicon®, and Mark Levinson® and leading-edge connectivity, safety and audio technologies. The Company is admired by audiophiles across multiple generations and supports leading professional entertainers and the venues where they perform. More than 25 million automobiles on the road today are equipped with HARMAN audio and infotainment systems. HARMAN has a workforce of 14,800 people across the Americas, Europe, and Asia and reported sales of $4.7 billion for the last twelve months ended December 31, 2013. The Company’s shares are traded on the New York Stock Exchange under the symbol NYSE:HAR. Please visit www.harman.com for more information.

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 in this earnings release are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act, as amended. One should not place undue reliance on these statements. The Company bases these statements on particular assumptions that it has made in light of its industry experience, as well as its perception of historical trends, current market conditions, current economic data, expected future developments and other factors that the Company believes are appropriate under the circumstances. These statements involve risks, uncertainties and assumptions that could cause actual results to differ materially from those suggested in the forward-looking statements, including but not limited to: (1) the Company’s ability to maintain profitability in its infotainment division if there are delays in its 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) fluctuations in currency exchange rates, particularly with respect to the value of the U.S. Dollar and the Euro; (4) the Company’s ability to successfully implement its global footprint initiative, including achieving cost reductions and other benefits in connection with the restructuring of its manufacturing, engineering, procurement and administrative organizations; (5) fluctuations in the price and supply of raw materials including, without limitation, petroleum, copper, steel, aluminum, synthetic resins, rare metals and rare-earth minerals, or shortages of materials, parts and components; (6) the inability of the Company’s suppliers to deliver products at the scheduled rate and disruptions arising in connection therewith; (7) the Company’s ability to maintain a competitive technological advantage through innovation and leading product designs; (8) the Company’s failure to maintain the value of its brands and implementing a sufficient brand protection program; and (9) other risks detailed in Harman International Industries, Incorporated Annual Report on Form 10-K for the fiscal year ended June 30, 2013 and other filings made by the Company with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statement except as required by law.

This earnings release also makes reference to the Company’s awarded business, which represents the estimated future lifetime net sales for all customers. The Company’s future awarded business does not represent firm customer orders. The Company reports its awarded business primarily based on written award letters. To validate these awards, the company uses various assumptions including global vehicle production forecasts, customer take rates for the Company’s products, revisions to product life cycle estimates and the impact of annual price reductions and exchange rates, among other factors. These assumptions are updated and reported externally on an annual basis. The Company updates the estimates and awarded business quarterly by adding the value of new awards received and subtracting sales recorded during the quarter. These quarterly updates do not include any assumptions for increased take rates, revisions to product life cycle, or any other factors.

HAR-E

APPENDIX

Infotainment Division
FY 2014 Key Figures – Infotainment			Three Months Ended December 31																Six Months Ended December 31
											Increase  (Decrease)																Increase  (Decrease)
$ millions			3M  FY14				3M  FY13				Including Currency Changes				Excluding Currency Changes1				6M  FY14				6M  FY13				Including Currency Changes				Excluding Currency Changes1
Net sales			691				540				28	%			24	%			1,330				1,101				21	%			17	%
Gross profit			165				113				46	%			42	%			307				242				27	%			23	%
Percent of net sales			23.9	%			20.9	%											23.0	%			22.0	%
SG&A & Other			102				83				24	%			20	%			211				167				27	%			22	%
Operating income			63				30				107	%			104	%			95				75				27	%			24	%
Percent of net sales			9.1	%			5.6	%											7.1	%			6.8	%
EBITDA			79				45				75	%			71	%			127				105				21	%			18	%
Percent of net sales			11.4	%			8.3	%											9.6	%			9.5	%
Restructuring-related costs			(1	)			(1	)											21				0
Non-GAAP1
Gross profit			167				113				47	%			43	%			309				242				28	%			24	%
Percent of net sales			24.1	%			20.9	%											23.2	%			22.0	%
SG&A & Other)			105				83				26	%			22	%			194				167				16	%			12	%
Operating income			61				30				106	%			103	%			116				75				55	%			52	%
Percent of net sales			8.9	%			5.5	%											8.7	%			6.8	%
EBITDA			76				45				71	%			67	%			145				105				39	%			35	%
Percent of net sales			11.0	%			8.2	%											10.9	%			9.5	%
1 A non-GAAP measure, see reconciliations of non-GAAP measures later in this release.

Net sales in the second quarter of fiscal 2014 were $691 million, an increase of 28 percent compared to the prior year, or 24 percent excluding the impact of foreign currency translation. The increase in sales is due to higher automotive production volumes, the expansion of the Company’s recent production launches across car lines, and higher take rates.

On a non-GAAP basis in the second quarter of fiscal 2014, gross margin increased 317 basis points to 24.1 percent compared to the prior year primarily due to the impact of improved leverage on fixed production costs, benefits from foot-print migration initiatives, and an increased mix of scalable infotainment systems. SG&A spending decreased 20 basis points to 15.3 percent of net sales primarily due to improved operating leverage on higher sales.

Infotainment Division Highlights

During the quarter, HARMAN secured several new business awards, expanded its recent platform launches across car lines, and launched its next-generation scalable infotainment platform at the Consumer Electronics Show (“CES”) to address safety, cyber security, and application development.

HARMAN secured new awards totaling $725 million from existing and new automotive customers including VW Group, Chang’an, and Geely. The Company won infotainment system orders from Yamaha to equip motorcycles in North America and secured new business from Suzuki, making HARMAN the first non-Asian supplier to deliver an infotainment solution specifically designed for the Japanese market. HARMAN was also awarded infotainment services business from automakers BMW and Jaguar/Land Rover. These services contracts are for installed HARMAN infotainment systems and are designed to “future-proof” the infotainment solution.

HARMAN’s award-winning Uconnect system developed for Fiat/Chrysler continued its rollout on vehicles including the Jeep Cherokee, Fiat 500L, and Alfa Romeo models.

The Company is also continuing to drive its undisputed leadership in infotainment and technology innovation. At CES, HARMAN announced its next-generation scalable infotainment platform based on innovative system architecture that offers rapid development of connected car apps and advanced safety features while protecting the integrity of the system against cyber security threats. The new platform offers an HTML-5 based application environment which paves the way to an app ecosystem in the world of in-car infotainment. In addition, the new platform enhances security with hypervisor-based domain separation securing critical vehicle functions from errant or malicious software. This solution provides a foundation to support the future of autonomous driving.

Lifestyle Division
FY 2014 Key Figures – Lifestyle			Three Months Ended December 31																Six Months Ended December 31
											Increase  (Decrease)																Increase  (Decrease)
$ millions			3M  FY14				3M  FY13				Including Currency Changes				Excluding Currency Changes1				6M  FY14				6M  FY13				Including Currency Changes				Excluding Currency Changes1
Net sales			430				372				16	%			14	%			764				663				15	%			14	%
Gross profit			136				102				33	%			32	%			243				197				24	%			23	%
Percent of net sales			31.7	%			27.6	%											31.8	%			29.7	%
SG&A & Other			85				53				62	%			60	%			151				110				38	%			36	%
Operating income			51				50				3	%			1	%			92				87				6	%			5	%
Percent of net sales			11.9	%			13.4	%											12.1	%			13.1	%
EBITDA			59				59				0	%			(1	%)			109				104				4	%			3	%
Percent of net sales			13.8	%			15.9	%											14.2	%			15.7	%
Restructuring-related costs			4				(11	)											6				(11	)
Non-GAAP1
Gross profit			136				103				32	%			30	%			243				198				23	%			22	%
Percent of net sales			31.6	%			27.8	%											31.9	%			29.8	%
SG&A & Other			81				64				26	%			24	%			145				121				20	%			19	%
Operating income			55				39				41	%			39	%			98				76				29	%			27	%
Percent of net sales			12.9	%			10.5	%											12.8	%			11.5	%
EBITDA			63				48				34	%			32	%			114				92				23	%			22	%
Percent of net sales			14.8	%			12.8	%											14.9	%			13.9	%
1 A non-GAAP measure, see reconciliations of non-GAAP measures later in this release.

Net sales in the second quarter of fiscal 2014 were $430 million, an increase of 16 percent compared to the prior year or 14 percent excluding the impact of foreign currency translation. Revenues increased double digits in both the Company’s home and multimedia product lines and the car audio business. The growth in home and multimedia was primarily due to new product introductions and the impact of the Company’s marketing initiatives. The growth in car audio was primarily due to higher automotive production volumes and increased take rates.

On a non-GAAP basis in the second quarter of fiscal 2014, gross margin increased by 384 basis points to 31.6 percent compared to the prior year primarily due to the impact of improved leverage of fixed production costs and reduced costs from foot-print migration initiatives. SG&A expense as a percentage of sales increased by 149 basis points to 18.8 percent primarily due to higher marketing costs.

Lifestyle Division Highlights

The Lifestyle Division continued to gain momentum with its award-winning home and multimedia and car audio solutions. HARMAN launched car audio systems in several vehicles, including a Lexicon system in the Hyundai Genesis and a JBL system in the Toyota Highlander. Furthermore, HARMAN secured several new car audio awards targeted for the fast-growing small car segment. Hyundai, Chang’an, Geely, and SAIC all selected HARMAN scalable audio solutions.

HARMAN won an order from Daimler for its innovative, hands-free MEMS microphones across car lines. As cars become ever more connected, voice control becomes increasingly important as a way for drivers to interact with in-vehicle systems. The MEMS microphones deliver the advantage of a small form factor and superior audio sensitivity.

HARMAN received 15 Red Star and eight CES design and innovation awards for home and multimedia products, bringing the total number of awards for the past two product cycles to a record high 62.

In November, the Company opened its first North American retail location with a flagship store on Madison Avenue in New York City. The HARMAN store is a customer experience center that transforms how consumers interact with audio products.

At CES, the Company also introduced a proprietary software solution, called Signal Doctor™ by HARMAN, which automatically analyzes and improves the audio quality of all types of compressed, digitized and streaming music sources. The technology leverages HARMAN’s expertise in music recording, signal processing, and psycho-acoustics to restore the full sound that is forfeited in the compression process. Signal Doctor™ by HARMAN will be launched by multiple automakers and in a range of home and multimedia products later this year.

Professional Division
FY 2014 Key Figures – Professional			Three Months Ended December 31																Six Months Ended December 31
											Increase  (Decrease)																Increase  (Decrease)
$ millions			3M  FY14				3M  FY13				Including Currency Changes				Excluding Currency Changes1				6M  FY14				6M  FY13				Including Currency Changes				Excluding Currency Changes1
Net sales			207				144				45	%			46	%			405				287				41	%			42	%
Gross profit			78				56				39	%			40	%			151				111				36	%			37	%
Percent of net sales			37.4	%			39.0	%											37.3	%			38.7	%
SG&A & Other			52				36				44	%			45	%			99				72				38	%			39	%
Operating income			25				20				29	%			31	%			52				40				31	%			34	%
Percent of net sales			12.2	%			13.8	%											12.8	%			13.8	%
EBITDA			31				23				33	%			36	%			62				46				35	%			38	%
Percent of net sales			14.9	%			16.1	%											15.3	%			15.9	%
Restructuring-related costs			2				0												2				0
Non-GAAP1
Gross profit			78				56				40	%			41	%			152				111				36	%			37	%
Percent of net sales			37.7	%			39.0	%											37.4	%			38.7	%
SG&A & Other			51				37				39	%			40	%			98				72				35	%			36	%
Operating income			27				19				40	%			43	%			54				39				38	%			40	%
Percent of net sales			13.0	%			13.5	%											13.3	%			13.6	%
EBITDA			32				23				43	%			46	%			64				45				41	%			43	%
Percent of net sales			15.6	%			15.8	%											15.7	%			15.8	%
1 A non-GAAP measure, see reconciliations of non-GAAP measures later in this release.

Net sales in the second quarter of fiscal 2014 were $207 million, an increase of 45 percent compared to the prior year or 46 percent excluding foreign currency translation. The increase in net sales is primarily due to the expansion of the Company’s product portfolio into lighting as a result of the acquisition of Martin Professional and stronger demand for the Company’s audio products.

On a non-GAAP basis in the second quarter of fiscal 2014, gross margin decreased 136 basis points to 37.7 percent compared to the prior year primarily due to lower gross margins on lighting products. SG&A expense as a percentage of sales decreased 92 basis points to 24.6 percent due to improved operating leverage on higher sales.

Professional Division Highlights

The Professional Division continued to experience robust demand for its audio and lighting products for use at a wide range of live entertainment events and fixed-venue installations worldwide.

In the second quarter, the Company’s audio and lighting solutions were installed at the following venues: BMW World Customer Center in Germany, King Abdullah Sports Center in Saudi Arabia, Salvador International Airport in Brazil, and the St. Louis Cardinals and San Diego Padres baseball parks.

HARMAN’s Professional products were featured in numerous high profile events including the GRAMMY Awards, Grand Central Station’s 100th Anniversary Celebration, and the American and Country Music Awards.

HARMAN was also awarded its third GRAMMY Award for its technical contributions to the recording field. The technical GRAMMY recognized Lexicon’s contributions to the art and science of music recording and reproduction through innovation and excellence in product design. HARMAN is the only audio systems company to earn multiple Technical GRAMMY Awards. The Company’s AKG microphone and headphone brand and JBL brand were recognized in 2010 and 2005, respectively.

Other (Corporate)
FY 2014 Key Figures – Other			Three Months Ended December 31														Six Months Ended December 31
									Increase  (Decrease)														Increase  (Decrease)
$ millions			3M  FY14			3M  FY13			Including Currency Changes				Excluding Currency Changes1				6M  FY14			6M  FY13			Including Currency Changes				Excluding Currency Changes1
SG&A & Other			38			32			18	%			18	%			68			55			25	%			26	%
Restructuring-related costs			2			0											2			0
Non-GAAP1
SG&A & Other			36			32			14	%			14	%			67			55			23	%			23	%
1A non-GAAP measure, see reconciliations of non-GAAP measures later in this release.

Other (Corporate) SG&A expense includes compensation, benefit and occupancy costs for corporate employees, new technology innovation, and expenses associated with the Company’s brand identity campaign. SG&A expenses as a percentage of net sales decreased by 29 basis points to 2.7%.

HARMAN International Industries, Incorporated
Consolidated Statements of Income
(In thousands, except earnings per share data; unaudited)			Three Months Ended December 31,								Six Months Ended December 31,
				2013				2012				2013				2012
Net sales			$	1,328,024			$	1,055,642			$	2,499,829			$	2,053,835
Cost of sales				948,574				783,849				1,798,730				1,503,795
Gross profit				379,450				271,793				701,099				550,040
Selling, general and administrative expenses				277,594				203,411				529,861				402,567
Operating income				101,856				68,382				171,238				147,473
Other expenses:
Interest expense, net				1,855				3,687				3,825				9,682
Foreign exchange losses, net				3,110				988				3,971				1,139
Miscellaneous, net				1,792				1,430				3,121				2,609
Income before income taxes				95,099				62,277				160,321				134,043
Income tax expense, net				23,470				14,788				42,146				31,999
Equity in loss of unconsolidated subsidiaries				0				0				94				0
Net income			$	71,629			$	47,489			$	118,081			$	102,044
Earnings per share:
Basic			$	1.04			$	0.69			$	1.71			$	1.48
Diluted			$	1.03			$	0.68			$	1.69			$	1.47
Weighted average shares outstanding:
Basic				68,715				69,009				69,131				68,846
Diluted				69,578				69,734				69,947				69,582

HARMAN International Industries, Incorporated
Consolidated Balance Sheets
(In thousands; unaudited)			December 31, 2013				June 30, 2013
ASSETS
Current assets
Cash and cash equivalents			$	518,556			$	454,258
Short-term investments				0				10,008
Receivables, net				757,006				722,711
Inventories				655,907				549,831
Other current assets				376,618				352,244
Total current assets				2,308,087				2,089,052
Property, plant and equipment, net				437,653				425,182
Goodwill				251,370				234,342
Deferred tax assets, long-term, net				240,380				260,749
Other assets				248,446				226,360
Total assets			$	3,485,936			$	3,235,685
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Current portion of long-term debt			$	30,000			$	30,000
Short-term debt				21,632				4,930
Accounts payable				616,521				498,055
Accrued liabilities				435,623				402,704
Accrued warranties				146,697				128,411
Income taxes payable				21,944				13,414
Total current liabilities				1,272,417				1,077,514
Long-term debt				240,038				255,043
Pension liability				171,888				167,687
Other non-current liabilities				120,664				90,570
Total liabilities				1,805,007				1,590,814
Total shareholders’ equity				1,680,929				1,644,871
Total liabilities and shareholders’ equity			$	3,485,936			$	3,235,685

HARMAN International Industries, Incorporated
Consolidated Statement of Income
Reconciliation of GAAP to Non-GAAP Results
(In thousands, except earnings per share data; unaudited)			Three Months Ended December 31, 2013
			GAAP				Adjustments					Non-GAAP
Net sales			$	1,328,024			$	0				$	1,328,024
Cost of sales				948,574			(1,384)a						947,190
Gross profit				379,450				1,384					380,834
Selling, general and administrative expenses				277,594			(4,469)b						273,125
Operating income				101,856				5,853					107,709
Other expenses:
Interest expense, net				1,855				0					1,855
Foreign exchange losses, net				3,110				0					3,110
Miscellaneous, net				1,792				0					1,792
Income before income taxes				95,099				5,853					100,952
Income tax expense, net				23,470				1,529(c	)				24,999
Equity in loss of unconsolidated subsidiaries				0				0					0
Net income			$	71,629			$	4,324				$	75,953
Earnings per share:
Basic			$	1.04			$	0.06				$	1.11
Diluted			$	1.03			$	0.06				$	1.09
Weighted average shares outstanding:
Basic				68,715									68,715
Diluted				69,578									69,578

a)			Restructuring expense in Cost of Sales was $2.0 million for projects to increase manufacturing productivity; other non-recurring expense included in Cost of Sales was income of $0.6 million.
b)			Restructuring expense in SG&A was $2.9 million primarily due to projects to increase productivity in engineering and administrative functions; other non-recurring expense included in SG&A was $1.5 million.
c)			The tax benefits are calculated by multiplying the actual restructuring / non-recurring charge in each individual country by the discrete tax rate within that specific country.

HARMAN has provided a reconciliation of non-GAAP measures in order to provide the users of these financial statements with a better understanding of its 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 HARMAN’s consolidated financial statements prepared in accordance with US GAAP.

HARMAN International Industries, Incorporated
Consolidated Statement of Income
Reconciliation of GAAP to Non-GAAP Results
(In thousands, except earnings per share data; unaudited)			Six Months Ended December 31, 2013
			GAAP				Adjustments					Non-GAAP
Net sales			$	2,499,829			$	0				$	2,499,829
Cost of sales				1,798,730			(3,433)a						1,795,297
Gross profit				701,099				3,433					704,532
Selling, general and administrative expenses				529,861			(26,455)b						503,406
Operating income				171,238				29,888					201,126
Other expenses:
Interest expense, net				3,825				0					3,825
Foreign exchange losses, net				3,971				0					3,971
Miscellaneous, net				3,121				0					3,121
Income before income taxes				160,321				29,888					190,209
Income tax expense, net				42,146				5,150(c	)				47,296
Equity in loss of unconsolidated subsidiaries				94				0					94
Net income			$	118,081			$	24,738				$	142,819
Earnings per share:
Basic			$	1.71			$	0.36				$	2.07
Diluted			$	1.69			$	0.35				$	2.04
Weighted average shares outstanding:
Basic				69,131									69,131
Diluted				69,947									69,947

a)			Restructuring expense in Cost of Sales was $4.0 million due to projects to increase productivity in manufacturing; other non- recurring expense included in Cost of Sales was income of $0.6 million.
b)			Restructuring expense in SG&A was $24.9 million primarily due to projects to increase productivity in engineering and administrative functions; other non-recurring expense in SG&A was 1.5 million.
c)			The tax benefits are calculated by multiplying the actual restructuring / non-recurring 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.

Harman International Industries, Incorporated
Reconciliation of GAAP to Non-GAAP Results
(In thousands, except earnings per share data; unaudited)			Three Months Ended December 31, 2012
			GAAP				Adjustments					Non-GAAP
Net sales			$	1,055,642			$	0				$	1,055,642
Cost of sales				783,849			(956)a						782,893
Gross profit				271,793				956					272,749
Selling, general and administrative expenses				203,411			12,643b						216,054
Operating income				68,382				(11,687	)				56,695
Other expenses:
Interest expense, net				3,687				(1,129	)				2,558
Foreign exchange losses, net				988				0					988
Miscellaneous, net				1,430				0					1,430
Income before income taxes				62,277				(10,558	)				51,719
Income tax expense, net				14,788				(4,127	)c				10,661
Equity in loss of unconsolidated subsidiaries				0				0					0
Net income			$	47,489			$	(6,431	)			$	41,058
Earnings per share:
Basic			$	0.69			$	0.09				$	0.59
Diluted			$	0.68			$	0.09				$	0.59
Weighted average shares outstanding:
Basic				69,009									69,009
Diluted				69,734									69,734

a)			Restructuring expense in Cost of Sales was $1.0 million due to projects to increase efficiency in manufacturing.
b)			Non-recurring income in SG&A was $12.6 million primarily due to reduction of a contingent consideration accrual related to the acquisition of HARMAN Embedded Audio LLC, formerly known as MWM Acoustics.
c)			The tax benefits are calculated by multiplying the actual restructuring \ non-recurring 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.

Harman International Industries, Incorporated
Reconciliation of GAAP to Non-GAAP Results
(In thousands, except earnings per share data; unaudited)			Six Months Ended December 31, 2012
			GAAP				Adjustments					Non-GAAP
Net sales			$	2,053,835			$	0				$	2,053,835
Cost of sales				1,503,795			(996)a						1,502,799
Gross profit				550,040				996					551,036
Selling, general and administrative expenses				402,567			12,455b						415,022
Operating income				147,473				(11,459	)				136,014
Other expenses:
Interest expense, net				9,682				(1,128	)				8,554
Foreign exchange losses, net				1,139				0					1,139
Miscellaneous, net				2,609				(26	)				2,583
Income before income taxes				134,043				(10,305	)				123,738
Income tax expense, net				31,999				(4,064	)c				27,935
Equity in loss of unconsolidated subsidiaries				0				0					0
Net income			$	102,044			$	(6,241	)			$	95,803
Earnings per share:
Basic			$	1.48			$	0.09				$	1.39
Diluted			$	1.47			$	0.09				$	1.38
Weighted average shares outstanding:
Basic				68,846									68,846
Diluted				69,582									69,582

a)			Restructuring expense in Cost of Sales was $1.0 million due to projects to increase efficiency in manufacturing.
b)			Non-recurring income in SG&A was $12.5 million primarily due to reduction of a contingent consideration accrual related to the acquisition of HARMAN Embedded Audio LLC, formerly known as MWM Acoustics
c)			The tax benefits are calculated by multiplying the actual restructuring \ non-recurring 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.

HARMAN International Industries, Incorporated
Selected Financial Data
Reconciliation of GAAP to Non-GAAP Results
Foreign Currency Translation Impact
(In thousands; unaudited)			Three Months Ended December 31,								Increase (Decrease)
				2013				2012
Net sales – nominal currency			$	1,328,024			$	1,055,642			26%
Effect of foreign currency translation(1)								21,622
Net sales – local currency				1,328,024				1,077,264			23%
Gross profit – nominal currency				379,450				271,793			40%
Effect of foreign currency translation(1)								3,902
Gross profit – local currency				379,450				275,695			38%
SG&A & Other – nominal currency				277,594				203,411			36%
Effect of foreign currency translation(1)								3,194
SG&A & Other – local currency				277,594				206,605			34%
Operating income – nominal currency				101,856				68,382			49%
Effect of foreign currency translation(1)								708
Operating income – local currency				101,856				69,090			47%
Net income – nominal currency				71,629				47,489			51%
Effect of foreign currency translation(1)								915
Net income – local currency				71,629				48,404			48%
(1) Impact of restating prior year results at current year foreign exchange rates.

HARMAN 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 Company’s performance. Because changes in currency exchange rates affect its reported financial results, the Company shows the rates of change both including and excluding the effect of these changes in exchange rates. HARMAN encourages readers of its financial statements to evaluate its 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 HARMAN’s consolidated financial statements prepared in accordance with US GAAP.

HARMAN International Industries, Incorporated
Selected Financial Data
Reconciliation of Non-GAAP Results
Foreign Currency Translation Impact
EXCLUDING restructuring and non-recurring charges (In thousands; unaudited)			Three Months Ended December 31,								Increase (Decrease)
				2013				2012
Net sales – nominal currency			$	1,328,024			$	1,055,642			26%
Effect of foreign currency translation(1)								21,622
Net sales – local currency				1,328,024				1,077,264			23%
Gross profit – nominal currency				380,834				272,749			40%
Effect of foreign currency translation(1)								3,937
Gross profit – local currency				380,834				276,686			38%
SG&A & Other – nominal currency				273,125				216,054			26%
Effect of foreign currency translation(1)								3,194
SG&A & Other – local currency				273,125				219,248			25%
Operating income – nominal currency				107,709				56,695			90%
Effect of foreign currency translation(1)								743
Operating income – local currency				107,709				57,438			88%
Net income – nominal currency				75,953				41,058			85%
Effect of foreign currency translation(1)								974
Net income – local currency				75,953				42,032			81%
(1) Impact of restating prior year results at current year foreign exchange rates.

HARMAN has provided a reconciliation of the non-GAAP measures in the table above to provide the users of the consolidated financial statements with a better understanding of the Company’s performance. Because changes in currency exchange rates affect its reported financial results, the Company shows the rates of change both including and excluding the effect of these changes in exchange rates. The Company encourages readers of its financial statements to evaluate its 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 HARMAN’s consolidated financial statements prepared in accordance with US GAAP.

HARMAN International Industries, Incorporated
Selected Financial Data
Reconciliation of GAAP to Non-GAAP Results
Foreign Currency Translation Impact
(In thousands; unaudited)			Six Months Ended December 31,								Increase (Decrease)
				2013				2012
Net sales – nominal currency			$	2,499,829			$	2,053,835			22%
Effect of foreign currency translation(1)								47,967
Net sales – local currency				2,499,829				2,101,802			19%
Gross profit – nominal currency				701,099				550,040			27%
Effect of foreign currency translation(1)								9,253
Gross profit – local currency				701,099				559,293			25%
SG&A & Other – nominal currency				529,861				402,567			32%
Effect of foreign currency translation(1)								7,365
SG&A & Other – local currency				529,861				409,932			29%
Operating income – nominal currency				171,238				147,473			16%
Effect of foreign currency translation(1)								1,888
Operating income – local currency				171,238				149,361			15%
Net income – nominal currency				118,081				102,044			16%
Effect of foreign currency translation(1)								2,213
Net income – local currency				118,081				104,257			13%
(1) Impact of restating prior year results at current year foreign exchange rates.

HARMAN 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 Company’s performance. Because changes in currency exchange rates affect its reported financial results, the Company shows the rates of change both including and excluding the effect of these changes in exchange rates. HARMAN encourages readers of its financial statements to evaluate its 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 HARMAN’s consolidated financial statements prepared in accordance with US GAAP.

HARMAN International Industries, Incorporated
Selected Financial Data
Reconciliation of Non-GAAP Results
Foreign Currency Translation Impact
EXCLUDING restructuring and non-recurring charges (In thousands; unaudited)			Six Months Ended December 31,								Increase (Decrease)
				2013				2012
Net sales – nominal currency			$	2,499,829			$	2,053,835			22%
Effect of foreign currency translation(1)								47,967
Net sales – local currency				2,499,829				2,101,802			19%
Gross profit – nominal currency				704,532				551,036			28%
Effect of foreign currency translation(1)								9,289
Gross profit – local currency				704,532				560,325			26%
SG&A & Other – nominal currency				503,406				415,022			21%
Effect of foreign currency translation(1)								7,365
SG&A & Other – local currency				503,406				422,387			19%
Operating income – nominal currency				201,126				136,014			48%
Effect of foreign currency translation(1)								1,924
Operating income – local currency				201,126				137,938			46%
Net income – nominal currency				142,819				95,803			49%
Effect of foreign currency translation(1)								2,274
Net income – local currency				142,819				98,077			46%
(1) Impact of restating prior year results at current year foreign exchange rates.

HARMAN has provided a reconciliation of the non-GAAP measures in the table above to provide the users of the consolidated financial statements with a better understanding of the Company’s performance. Because changes in currency exchange rates affect its reported financial results, the Company shows the rates of change both including and excluding the effect of these changes in exchange rates. HARMAN encourages readers of its financial statements to evaluate its 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 HARMAN’s consolidated financial statements prepared in accordance with US GAAP.

Harman International Industries, Incorporated
Reconciliation of GAAP to Non-GAAP Results
(In thousands, except earnings per share data; unaudited)			Three Months Ended December 31, 2013										Three Months Ended December 31, 2012
			GAAP			Adjustments				Non-GAAP			GAAP			Adjustments				Non-GAAP
HARMAN:
Operating Income			101,856			5,853				107,709			68,382			(11,687	)			56,695
Depreciation & Amortization			32,526			(1,435	)			31,091			30,299			(956	)			29,343
EBITDA			134,382			4,418				138,800			98,681			(12,643	)			86,038
INFOTAINMENT:
Operating Income			62,691			(1,497	)			61,194			30,251			(566	)			29,685
Depreciation & Amortization			16,198			(1,386	)			14,812			14,815			0				14,815
EBITDA			78,889			(2,883	)			76,006			45,066			(566	)			44,500
LIFESTYLE:
Operating Income			51,103			4,205				55,308			49,832			(10,710	)			39,122
Depreciation & Amortization			8,162			0				8,162			9,329			(932	)			8,397
EBITDA			59,265			4,205				63,470			59,161			(11,642	)			47,519
PROFESSIONAL:
Operating Income			25,404			1,620				27,024			19,742			(413	)			19,329
Depreciation & Amortization			5,407			(49	)			5,358			3,366			(24	)			3,342
EBITDA			30,811			1,571				32,382			23,108			(437	)			22,671

HARMAN has provided a reconciliation of non-GAAP measures in order to provide the users of these financial statements with a better understanding of its 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 HARMAN’s consolidated financial statements prepared in accordance with US GAAP.

Harman International Industries, Incorporated
Reconciliation of GAAP to Non-GAAP Results
(In thousands, except earnings per share data; unaudited)			Six Months Ended December 31, 2013										Six Months Ended December 31, 2012
			GAAP			Adjustments				Non-GAAP			GAAP			Adjustments				Non-GAAP
HARMAN:
Operating Income			171,238			29,888				201,126			147,473			(11,459	)			136,014
Depreciation & Amortization			64,239			(3,454	)			60,785			58,843			(996	)			57,847
EBITDA			235,477			26,434				261,911			206,316			(12,455	)			193,861
INFOTAINMENT:
Operating Income			95,118			20,585				115,703			74,925			(294	)			74,631
Depreciation & Amortization			32,240			(2,736	)			29,504			30,055			0				30,055
EBITDA			127,358			17,849				145,207			104,980			(294	)			104,686
LIFESTYLE:
Operating Income			92,343			5,709				98,052			87,091			(10,843	)			76,248
Depreciation & Amortization			16,456			(621	)			15,835			17,066			(932	)			16,134
EBITDA			108,799			5,088				113,887			104,157			(11,775	)			92,382
PROFESSIONAL:
Operating Income			51,884			2,070				53,954			39,513			(322	)			39,191
Depreciation & Amortization			9,916			(97	)			9,819			6,127			(63	)			6,064
EBITDA			61,800			1,973				63,773			45,640			(385	)			45,255

HARMAN has provided a reconciliation of non-GAAP measures in order to provide the users of these financial statements with a better understanding of its 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 HARMAN’s consolidated financial statements prepared in accordance with US GAAP.

HARMAN International Industries, Incorporated
Total Liquidity Reconciliation
Total Company Liquidity			December 31,  2013
$ millions
Cash & cash equivalents			$	519
Short-term investments				0
Available credit under Revolving Credit Facility				744
Total liquidity			$	1,263