Harman International Industries, Incorporated, the leading global audio and infotainment group (NYSE: HAR) today announced that Standard & Poor’s Ratings Services (“S&P”) has raised the Company’s
credit rating to the investment grade ‘BBB-’ from ‘BB+’, citing improved margins and lower business risk. S&P also raised the issue rating on the company's senior unsecured notes to 'BB+' from 'BB'.
In its statement, S&P commented that it expects the company will “continue a leadership position”, especially in the automotive audio and infotainment segments, with profitability at or above double-digit EBITDA margins. S&P also noted it expects HARMAN to expand both the automotive customers it supplies, and its global manufacturing presence. S&P noted its belief that HARMAN’s products can withstand competitive threats and the risk of commoditization, citing its expectation that the Company will “continue to successfully innovate its software and hard-ware based product lines”. S&P describes HARMAN’s liquidity as “strong”, and believes the company will be able to comfortably manage its $400 million October 2012 debt maturity with cash on hand or alternative borrowing.
“This investment-grade rating from S&P is a further validation of HARMAN’s growth strategy and relentless cost focus that has delivered 11 consecutive quarters of aggressive top and bottom line growth” said HARMAN Chairman, President and Chief Executive Officer Dinesh C. Paliwal. “The Company’s $16.1 billion order backlog in infotainment and premium branded audio is a clear demonstration of our continued leadership in innovation and customer satisfaction. At the same time, we’ve returned value to shareholders through dividend increases, and delivered earnings per share growth of over 40 percent in the last year. With our scalable global footprint and capital structure firmly in place, we are well positioned to capitalize on growth opportunities and deliver continued financial performance.”
) designs, manufactures and markets a wide range of audio and infotainment solutions for the automotive, consumer and professional markets — supported by 15 leading brands, including AKG, Harman Kardon, Infinity, JBL, Lexicon and Mark Levinson. 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 about 13,400 people across the Americas, Europe and Asia, and reported net sales of $4.4 billion for twelve months ending June 30, 2012. The Company's shares are traded on the New York Stock Exchange under the symbol NYSE:HAR.
Except for historical information contained herein, the matters discussed in this news release are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act.
One 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: (1) our ability to maintain profitability in our infotainment division if there are delays in our 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) warranty obligations for defects in our products; (4) fluctuations in currency exchange rates, particularly with respect to the value of the U.S. Dollar and the Euro; (5) our ability to successfully implement our global footprint initiative, including achieving cost reductions and other benefits in connection with the restructuring of our manufacturing, engineering, procurement and administrative organizations; (6) 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; (7) the inability of our suppliers to deliver products at the scheduled rate and disruptions arising in connection therewith; (8) our ability to attract and retain qualified senior management and to prepare and implement an appropriate succession plan for our critical organizational positions; (9) our failure to implement and maintain a comprehensive disaster recovery program; (10) our failure to comply with governmental rules and regulations, including the Foreign Corrupt Practices Act and U.S. export control laws, and the cost of compliance with such laws; (11) our ability to maintain a competitive technological advantage through innovation and leading product designs; (12) our failure to maintain the value of our brands and implementing a sufficient brand protection program; (13) acceptance of our mid-platform infotainment systems by original equipment manufacturers and consumers; (14) the outcome of pending or future litigation and other claims, including, but not limited to, the current stockholder and Employee Retirement Income Security Act of 1974 lawsuits; (15) our ability to enforce or defend our ownership and use of intellectual property rights; and (16) other risks detailed in Harman International Industries, Incorporated Annual Report on Form 10-K for the fiscal year ended June 30, 2011 and other filings made by the Company with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise any forward-looking statement except as required by law. This news release also makes reference to the Company’s sales backlog.
The Company's sales backlog reflects anticipated net sales from formally awarded new programs and open replacement programs, less phased-out and cancelled programs. The sales backlog may be impacted by various assumptions embedded in the calculation, including vehicle production levels on new and replacement programs, foreign currency exchange rates and the timing of major program launches.