<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended: SEPTEMBER 30, 1995
Commission File Number: 1-9764
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 11-2534306
- ---------------------------------- --------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
1101 PENNSYLVANIA AVENUE, NW WASHINGTON, D.C. 20004
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(202) 393-1101
- ------------------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
- -------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES X NO
------- -------
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
16,252,015 shares of Common Stock, $.01 par value, at October 31, 1995.
<PAGE>
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - September 30,
1995 and June 30, 1995 3
Condensed Consolidated Statements of Operations -
Three months ended September 30, 1995 and 1994 4
Condensed Consolidated Statements of Cash Flows -
Three months ended September 30, 1995 and 1994 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of the Results
of Operations and Financial Condition 7-9
PART II. OTHER INFORMATION 10
SIGNATURES 11
EXHIBIT 10.55 12
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1995 AND JUNE 30, 1995
(000s omitted except per share amounts)
<TABLE>
(Unaudited) (Audited)
09/30/95 06/30/95
ASSETS --------------- ---------------
<S> <C> <C>
Current Assets:
Cash and short-term investments $ 8,803 $ 11,252
Receivables (less allowance for doubtful
accounts: $12,478 at September 30, 1995,
and $12,313 at June 30, 1995) 283,879 264,898
Inventories
Finished goods and inventory
purchased for resale 157,911 146,132
Work in process 31,483 28,412
Raw materials and supplies 71,553 61,988
--------------- ---------------
Total inventories 260,947 236,532
Other current assets 52,484 39,973
--------------- ---------------
Total current assets 606,113 552,655
Property, plant and equipment, net 187,557 189,823
Other assets 17,912 21,890
Excess of cost over fair value of assets acquired, net 124,809 122,504
--------------- ---------------
Total assets $ 936,391 $ 886,872
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 28,926 $ 27,208
Current portion of long-term debt 17,020 13,006
Accounts payable 94,804 90,755
Accrued liabilities 150,303 164,122
--------------- ---------------
Total current liabilities 291,053 295,091
Other non-current liabilities 30,445 31,199
Borrowings under Revolving Credit Facility 163,464 106,244
Senior long-term debt 41,157 50,277
Subordinated long-term debt 109,800 109,500
Deferred income 755 1,082
Minority interest 4,004 3,989
Shareholders' Equity:
Common stock, $0.01 par value 159 152
Additional paid-in capital 185,124 156,257
Equity adjustment from foreign
currency translation 7,032 6,157
Retained earnings 103,398 126,924
--------------- ---------------
Net shareholders' equity 295,713 289,490
Total liabilities and
shareholders' equity $ 936,391 $ 886,872
========= =========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(000s omitted except per share amounts)
(UNAUDITED)
<TABLE>
Three Months Ended
September 30,
1995 1994
--------------- ---------------
<S> <C> <C>
Net sales $ 300,474 $ 228,607
Cost of sales 210,988 152,741
--------------- ---------------
Gross profit 89,486 75,866
Selling, general and administrative expenses 73,213 61,707
--------------- ---------------
Operating income 16,273 14,159
Other expenses:
Interest expense 6,937 5,736
Miscellaneous, net 275 1,318
--------------- ---------------
Income before income taxes, minority
interest and extraordinary items 9,061 7,105
Income tax expense 3,123 2,830
Minority interest 34 77
--------------- ---------------
Income before extraordinary items 5,904 4,198
Extraordinary items, net of income taxes -- (48)
--------------- ---------------
Net income $ 5,904 $ 4,150
========= =========
Earnings per share of common stock before
extraordinary items $ 0.36 $ 0.26
========= =========
Earnings per common share $ 0.36 $ 0.26
========= =========
Weighted average number of common
shares outstanding 16,235 15,829
========= =========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
($000s omitted)
(UNAUDITED)
<TABLE> 1995 1994
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 5,904 $ 4,150
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 12,393 9,029
Amortization of intangible assets 1,335 584
Amortization of deferred income (323) (324)
Changes in assets and liabilities, net of effects
from purchase of companies:
(Increase) decrease in:
Receivables (16,979) 8,480
Inventories (20,294) (8,685)
Other current assets (7,642) (6,356)
Increase (decrease) in:
Accounts payable 2,785 (11,404)
Accrued liabilities (14,517) (9,420)
--------------- ---------------
Total adjustments (43,242) (18,096)
--------------- ---------------
Net cash provided by (used in) operating activities $ (37,338) $ (13,946)
--------------- ---------------
Cash flow from investing activities:
Payment for purchase of companies, net of
cash acquired $ (9,133) $ (3,676)
Capital expenditures for property, plant and equipment (13,424) (9,552)
Other items, net 2,995 (1,838)
--------------- ---------------
Net cash used in investing activities $ (19,562) $ (15,066)
--------------- ---------------
Cash flow from financing activities:
Net borrowings under lines of credit $ 1,718 $ 40,847
Net proceeds from (repayments of) long-term debt 52,414 (4,007)
Dividends paid to stockholders (875) (603)
Proceeds from exercise of stock options 319 213
Net change, foreign currency translation 875 1,101
--------------- ---------------
Net cash provided by financing activities $ 54,451 $ 37,551
--------------- ---------------
Net increase (decrease) in cash and short-term
investments (2,449) 8,539
Cash and short-term investments at beginning of period 11,252 9,724
--------------- ---------------
Cash and short-term investments at end of period $ 8,803 $ 18,263
========= =========
Supplemental disclosures of cash flow information:
Interest paid $ 7,221 $ 6,785
Income taxes paid $ 5,901 $ 8,143
Supplemental schedule of non-cash investing activities:
Fair value of assets acquired $ 11,788 --
Cash paid for the capital stock 9,826 --
--------------- ---------------
Liabilities assumed $ 1,962 --
--------------- ---------------
See accompanying notes to Condensed Consolidated Financial Statements.
</TABLE> 5
<PAGE>
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
NOTE A - BASIS OF PRESENTATION
The Company's Condensed Consolidated Financial Statements for the
three months ended September 30, 1995 and 1994 have not been audited
by the Company's independent auditors; however, in the opinion of
management, the accompanying unaudited Condensed Consolidated
Financial Statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the consolidated financial
position of the Company and subsidiaries as of September 30, 1995 and
the results of their operations and their cash flows for the periods
presented.
The results of operations for the three months ended September 30,
1995 are not necessarily indicative of the results to be expected for the
full year.
NOTE B - ACQUISITIONS
On August 30, 1995, Harman International Industries, Incorporated,
exercised its option to purchase the remaining 80% of the issued and
outstanding shares of Madrigal Audio Laboratories, Inc. ("Madrigal"),
increasing its ownership to 100%. Harman paid approximately $9.8
million for the remaining shares and related acquisition costs. Harman
funded its acquisition of Madrigal utilizing its revolving credit facility.
The results of operations for the first quarter ended September 30, 1995,
include the results of Madrigal for July 1, 1995 through September 30,
1995, as the acquisition was made effective July 1, 1995.
NOTE C - STOCK DIVIDEND
In August 1995, the Company declared a special 5 percent stock
dividend to stockholders of record on August 11, 1995, payable on
August 25, 1995. Outstanding shares and earnings per share have been
retroactively restated to give effect to the stock dividend. In accordance
with ARB 43, the stock dividend was accounted for by transferring from
retained earnings to the common stock and additional paid-in capital
accounts an amount equal to the fair value of the additional shares
issued.
6
<PAGE>
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
- ------------------------------------
COMPARISON OF THE THREE MONTH PERIODS ENDED SEPTEMBER 30, 1995 AND 1994
Net sales for the quarter ended September 30, 1995, totaled $300.5
million, a 31 percent increase over the comparable period in the prior
year. Excluding Becker, which was not represented in the first quarter
of last year, sales increased 14 percent. The Professional, Consumer and
Automotive OEM Groups all reported higher sales.
The Professional Group contributed solid sales growth. JBL
Professional reported higher sales, driven in large part by the success of
the EON product line. Lexicon's sales increased on the strength of a
number of well-received new digital products, including the PCM80 and
NuVerb digital processors and the 500T touch screen remote control.
AKG and DOD also produced excellent sales increases.
The Consumer Group reported higher sales despite difficult market
conditions in China, which adversely affected JBL loudspeaker sales.
Harman Kardon had an excellent quarter due to strong demand for both
the Citation line of home theater components and its expanded line of
audio/video receivers. Infinity delivered higher sales for the quarter, led
by the acclaimed new Compositions home theater loudspeaker system.
First quarter sales of consumer electronics and loudspeakers in Europe
were especially robust.
The Automotive Group produced excellent results for the quarter. Sales
growth was partially attributable to Becker, which was not represented
in the first quarter last year. Shipments of high fidelity systems for the
Chrysler Minivan, Ford Explorer and the Jeep Grand Cherokee were
vigorous. The success of the new Toyota Avalon, which features a high-
end audio system supplied by the Automotive OEM Group, also
contributed to the results.
The gross profit margin for the quarter ended September 30, 1995, was
29.8 percent ($89.5 million) compared to 33.2 percent ($75.9 million) in
the prior year. The decrease in the gross margin percentage primarily
reflects the inclusion of Becker.
7
<PAGE>
Selling, general and administrative expenses as a percentage of net sales
decreased to 24.4 percent for the quarter ended September 30, 1995,
from 27.0 percent in the comparable period in the prior year. The
decrease reflects lower spending as a percentage of sales for advertising,
marketing, promotion and general and administrative expenses.
Operating income as a percentage of sales was 5.4 percent ($16.3
million) for the first quarter ended September 30, 1995, compared with
6.2 percent ($14.2 million) for the same period in the prior year. The
decrease reflects the inclusion of Becker, at essentially a break-even.
Interest expense for the three months ended September 30, 1995,
increased to $6.9 million from $5.7 million reported in the comparable
period in the prior year due to higher average borrowings. Average
borrowings outstanding were $323.8 million for the quarter, up from
$244.3 million for the same period a year ago. The increase in average
borrowings results from the Becker and Madrigal acquisitions and the
financing of increased working capital requirements associated with
higher sales volumes.
The impact of the increase in average borrowings on interest expense
was partially offset by a substantial reduction in the average interest rate
on borrowings. The average interest rate on borrowings was 8.6 percent
for the first quarter ended September 30, 1995, down from 9.4 percent
for the quarter ended September 30, 1994. The decrease in average
interest rates for the quarter results from the refinancing of unsecured
lines of credit with a committed revolving credit facility agreement which
was completed September 30, 1994. Additionally, the repayment and
retirement of long-term debt, which generally carried higher interest
rates than short-term debt, contributed to the decrease in the average
interest rate on borrowings. Interest expense as a percentage of sales
was 2.3 percent for the first quarter ended September 30, 1995, down
from 2.5 percent for the comparable period in the previous year.
Income before income taxes, minority interest and extraordinary items
for the first quarter of fiscal 1996 was $9.1 million, up from $7.1 million
in the previous year.
The effective tax rate for the first quarter of fiscal 1996 was 34.5 percent
compared with 39.8 percent in the same period a year ago. The decrease
in the effective tax rate for the quarter results from the restructuring of
certain foreign subsidiaries to take advantage of prior year tax losses.
The Company calculates its taxes based upon its best estimate of annual
results.
8
<PAGE>
Net income for the three months ended September 30, 1995, was $5.9
million, or $0.36 per share, compared with $4.2 million, or $0.26 per
share, in the previous year. Prior year earnings per share data has been
restated to give effect to the special 5 percent stock dividend declared
and paid in August 1995.
FINANCIAL CONDITION
- ---------------------------------
Net working capital at September 30, 1995, was $315.0 million,
compared with $257.6 million at June 30, 1995. The increase results
from the Becker and Madrigal acquisitions, higher inventories on-hand in
anticipation of the Christmas selling season, higher receivables associated
with strong sales volume late in the quarter and higher prepaid balances
associated with upcoming trade shows and advertising campaigns.
Borrowings under the revolving credit facility at September 30, 1995,
were $173.3 million, composed of swing line borrowings, which are
included in notes payable, of $9.8 million and competitive advance
borrowings and revolving credit borrowings of $163.5 million.
Other changes in the Company's balance sheet from June 30, 1995, the
end of the preceding fiscal year, are as follows:
- Accrued liabilities decreased $13.8 million, from $164.1 million to
$150.3 million, primarily due to federal income tax payments and
foreign currency translation effects.
- Other assets decreased $4.0 million, from $21.9 million to $17.9
million, resulting from the elimination of the September 1993 $2.5
million investment in Madrigal, which is now a consolidated
subsidiary.
9
<PAGE>
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are various legal proceedings pending against the
registrant and its subsidiaries, but, in the opinion of management,
liabilities, if any, arising from such claims will not have a
materially adverse effect upon the consolidated financial
condition of the registrant.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation S-K
Exhibit No. Description
------------ -------------------------------------------------
10.55 Second amendment, dated as of November 10,
1995, to the multi-currency, multi-option credit
agreement dated September 30, 1994.
(b) Reports on Form 8-K
None.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
(Registrant)
DATE: November 10, 1995 BY: /s/ Sidney Harman
-------------------------------
Sidney Harman
Chairman and Chief
Executive Officer
DATE: November 10, 1995 BY: /s/ F. Gordon Bitter
-------------------------------
F. Gordon Bitter
Chief Financial Officer
11
<PAGE>
EXHIBIT 10.55
12
<PAGE>
SECOND AMENDMENT
SECOND AMENDMENT, dated as of November 10, 1995 (this
"Amendment"), to the MULTI-CURRENCY, MULTI-OPTION
CREDIT AGREEMENT, dated as of September 30, 1994 (as amended,
supplemented or otherwise modified from time to time, the "Credit
Agreement"; terms defined therein being used herein as therein defined),
among HARMAN INTERNATIONAL INDUSTRIES,
INCORPORATED, the Subsidiary Borrowers and Subsidiary
Guarantors parties thereto, the Lenders parties thereto,
NATIONSBANK OF NORTH CAROLINA, N.A., as Co-Agent,
CHEMICAL SECURITIES INC., as Arranger and CHEMICAL BANK,
as Administrative Agent.
W I T N E S S E T H:
WHEREAS, the parties to this Amendment wish to
amend the Credit Agreement in the manner hereinafter set forth; and
WHEREAS, this Amendment is entered into in
accordance with the provisions of subsection 14.1 of the Credit
Agreement;
NOW, THEREFORE, in consideration of the premises,
the parties hereto hereby agree as follows:
1. Amendment of Subsection 1.1 of the Credit
Agreement. The definition of "Termination Date" set forth in subsection
1.1 of the Credit Agreement is hereby amended by deleting the date
"September 30, 1999 and inserting in its place "September 30, 2000".
2. Amendment of Schedule II to the Credit Agreement.
(a) Addition of New Subsidiary Borrowers. (i) Each of
BECKER OF NORTH AMERICA, INC., MADRIGAL AUDIO LABORATORIES,
INC., each a subsidiary of the Company, BECKER HOLDING GMBH,
SPIRIT BY SOUNDCRAFT, INC., each a subsidiary of Harman
Investment Company, Inc., itself a wholly owned subsidiary of the
Company, and BECKER GMBH, a Subsidiary of Becker Holding
GmbH (collectively, the "New Subsidiary Borrowers") by its signature
below, hereby acknowledges that it has received and reviewed a copy (in
execution form) of the Credit Agreement, and agrees, from and after the
effective date of this Amendment (the "Effective Date"), to (i) join the
Credit Agreement as a Subsidiary Borrower, (ii) be bound by all
covenants, agreements and acknowledgments attributable to a
Subsidiary Borrower in the Credit Agreement and (iii) perform all
obligations required of it by the Credit Agreement.
(ii) Each New Subsidiary Borrower hereby represents
and warrants that the representations and warranties with respect to it
contained in, or made or deemed made by it in, Section 7 of the Credit
Agreement are true and correct on the date hereof and on the Effective
Date.
13
<PAGE> 2
(iii) The address and jurisdiction of incorporation of each
New Subsidiary Borrower are set forth in Annex I to this Amendment.
(iv) Each of the parties hereto agrees that (X) this
Amendment shall be deemed to be a Joinder Agreement, in form and
substance satisfactory for all purposes of the Credit Agreement, and (Y)
the Administrative Agent shall be entitled to, concurrently with the
effectiveness of this Amendment, amend and replace Schedule II to the
Credit Agreement to reflect the addition of the New Subsidiary
Borrowers.
(b) Removal of Restricted Subsidiaries. Schedule II
to the Credit Agreement is further amended by deleting references to
"STUDER S.E. ASIA PTE., LTD.," as a Subsidiary Borrower, and
"QUESTED MONITORING SYSTEMS LIMITED," as a Restricted
Subsidiary. Each of the parties hereto agrees that from and after the
Effective Date, Studer S.E. Asia Pte., Ltd. and Quested Monitoring
Systems Limited shall no longer be bound by the covenants, agreements
or acknowledgments pertaining to a Subsidiary Borrower or a Restricted
Subsidiary in the Credit Agreement.
3. Amendment of Subsection 3.2(b) of the Credit
Agreement. Subsection 3.2(b) of the Credit Agreement is hereby
amended by deleting it in its entirety and inserting in its place the
following:
"Each Lender that makes a Competitive Advance Loan
shall deliver a Notice of Competitive Advance Loan to the
Administrative Agent on the Thursday (or, if such Thursday
is not a Business Day, on the next Business Day following
such Thursday) immediately following the making of such
Competitive Advance Loan."
4. Amendment of Subsection 4.1 of the Credit Agreement.
(a) Subsection 4.1 of the Credit Agreement is amended
by inserting the following additional proviso at the end of the first
sentence of such subsection:
"and provided further, that notwithstanding the foregoing
restrictions, Swing Line Loans to any Borrower incorporated
under the laws of France, Germany or the United Kingdom
may exceed the amounts specified by the foregoing clause (ii)
so long as the aggregate Dollar Equivalent Amount of the
outstanding principal amount of all Swing Line Loans of all
Borrowers incorporated in such country does not exceed
$2,000,000 multiplied by the number of Swing Line Borrowers
in such country."
14
<PAGE> 3
5. Amendment of Schedule I to the Credit Agreement.
Schedule I to the Credit Agreement is hereby amended by replacing
it in its entirety with the text set forth in Annex II hereto as the
new Schedule I.
6. Amendment of Schedule IV to the Credit Agreement.
(a) Revision of the notice delivery location.
Schedule IV to the Credit Agreement is hereby amended by replacing the wording
in both II.A. and III.A. after "Deliver to:" in its entirety and inserting in
both places the following:
"Chemical Bank
270 Park Avenue
New York, New York 10017
Attention: Gloria Javier
Telephone No: 212-622-0648
Fax No: 212-622-0002"
(b) Revision of the notice delivery time for Competitive
Advance Loan. Schedule IV is further amended by replacing the wording
in II.B. after "Delivery time:" in its entirety and inserting the following:
"By close of business in New York on the Thursday (or,
if such Thursday is not a Business Day, on the next Business
Day following such Thursday) immediately following the day
the Competitive Advance Loan is made."
7. Representations and Warranties. The Company
hereby represents and warrants that, after giving effect to the
amendments effected hereby, the representations and warranties
contained in Section 7 of the Credit Agreement are true and correct on
the date hereof.
8. Conditions to Effectiveness. (a) This
Amendment shall become effective upon the receipt by the
Administrative Agent (which effectiveness shall be confirmed to the
other parties hereto by the Administrative Agent's delivery to such
parties of notice of such effectiveness) of (i) counterparts of this
Amendment, duly executed and delivered by the Company and all of the
Lenders, (ii) the amendment fee referred to in Section 9 of this
Amendment and (iii) a written legal opinion of Jones, Day, Reavis &
Pogue, addressed to the Administrative Agent and the Lenders, to the
effect that (x) this Amendment has been duly authorized, executed and
delivered by the Company and (y) this Amendment, and the Credit
Agreement as amended hereby, constitute the valid, binding and
enforceable obligations of the Company and the Domestic Subsidiaries
parties thereto (which opinion may contain exceptions and assumptions
similar to those contained in the opinion of such firm delivered on the
Closing Date).
15
<PAGE> 4
(b) In addition to the foregoing conditions to effectiveness, this
Amendment shall become effective with respect to the addition of each
New Subsidiary Borrower upon the receipt by the Administrative Agent
(which effectiveness shall be confirmed to the other parties hereto by the
Administrative Agent's delivery to such parties of a fully executed copy
of this Amendment) of the following:
(i) counterparts of this Amendment, duly executed by the
New Subsidiary Borrower; and
(ii) copies of corporate resolutions, other corporate
documents and legal opinions in respect of such New Subsidiary
Borrower, which resolutions, documents and opinions are substantially
equivalent to comparable materials delivered on the Closing Date in
respect of the other Subsidiary Borrowers.
9. Amendment Fee. The Company agrees to pay to
the Administrative Agent, for the account of each Lender, on the
Effective Date, a one-time fee of .075% of the amount by which such
Lender's Commitment is increased pursuant to this Amendment.
10. Miscellaneous. Except as expressly amended
herein, the Credit Agreement shall continue to be, and shall remain, in
full force and effect in accordance with its terms. This Amendment may
be executed by the parties hereto in any number of separate counterparts
and all of said counterparts taken together shall be deemed to constitute
one and the same instrument. The Company agrees to pay or reimburse
the Administrative Agent for all its out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution
of this Amendment including, without limitation, the fees and
disbursements of counsel to the Agent. THIS AMENDMENT SHALL
BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
16
<PAGE> 5
IN WITNESS WHEREOF, each of the parties hereto has caused
this Amendment to be duly executed and delivered by its proper and duly
authorized officer(s) as of the day and year first above written.
HARMAN INTERNATIONAL INDUSTRIES,
INCORPORATED
By: /s/ Bernard A. Girod
--------------------------
Name: Bernard A. Girod
Title: President and Chief Operating Officer
BECKER HOLDING GMBH
By: /s/ W.S. Palin
---------------------------
Name: W.S. Palin
Title: Vice President
BECKER GMBH
By: /s/ W.S. Palin
---------------------------
Name: W.S. Palin
Title: Vice President
BECKER OF NORTH AMERICA, INC.
By: /s/ Bernard A. Girod
--------------------------
Name: Bernard A. Girod
Title: President and Chief Operating Officer
MADRIGAL AUDIO LABORATORIES, INC.
By: /s/ Bernard A. Girod
--------------------------
Name: Bernard A. Girod
Title: President and Chief Operating Officer
SPIRIT BY SOUNDCRAFT, INC.
By: /s/ Bernard A. Girod
--------------------------
Name: Bernard A. Girod
Title: President and Chief Operating Officer
17
<PAGE> 6
ACKNOWLEDGED AND AGREED TO:
CHEMICAL BANK,
as Administrative Agent and Lender
By: /s/ Andrew Ackerman
----------------------------
Title: Senior Vice President
BANK OF MONTREAL
By: /s/ Thomas Peer
-----------------------
Title: Director
THE BANK OF NOVA SCOTIA
By: /s/ J.R. Trimble
---------------------------
Title: Senior Relationship Manager
CITIBANK, N.A.
By: /s/ Marjorie Futornick
-----------------------------
Title: Vice President
COMMERZBANK AG, LOS ANGELES BRANCH
By: /s/ Christian Jagenberg
------------------------------
Title: Senior Vice President and Manager
By: /s/ Karla Wirth
---------------------------
Title: Assistant Treasurer
GIROCREDIT BANK
By: /s/ Richard Stone
------------------------
Title: Vice President
MIDLAND BANK PLC, NEW YORK BRANCH
By: /s/ Jeffrey S. Dykes
------------------------------
Title: Vice President
18
<PAGE> 7
THE MITSUBISHI BANK, LTD.
By: /s/ Frank H. Madden
-------------------------------
Title: Joint General Manager
NATIONSBANK OF NORTH CAROLINA, N.A.
By: /s/ Sara Parsons
---------------------------
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Thomas P. Dunn
------------------------------
Title: Vice President
SOCIETE GENERALE
By: /s/ Gordon Saint-Denis
--------------------------------
Title: Vice President
19
<PAGE>
ANNEX I
INFORMATION FOR NEW SUBSIDIARY BORROWERS
Name and Address Jurisdiction of Incorporation
Becker Holding GmbH Germany
Im Stockmadle 1
76307 Karlsbad
Germany
Becker GmbH Germany
Im Stockmadle 1
76307 Karlsbad
Germany
Becker of North America, Inc. New Jersey
16 Park Way
Upper Saddle River, NJ 07458
Madrigal Audio Laboratories, Inc. Connecticut
2081 South Main Street
Middletown, CT 06457
Spirit by Soundcraft, Inc. Delaware
8500 Balboa Boulevard
Northridge, CA 91329
20
<PAGE> ANNEX II
LENDERS AND COMMITMENTS
<TABLE>
<S> <C> <C>
Commitment
Lenders Commitments Percentage
Chemical Bank $ 60,000,000 21.818181818182
140 East 45th Street
New York, NY 10017
NationsBank, N.A. $ 50,000,000 18.181818181818
6610 Rockledge Drive
1st Floor, MD2-600-01-05
Bethesda, MD 20817-1876
Commerzbank $ 27,500,000 10.000000000000
660 S. Figueroa Street
#1450
Los Angeles, CA 90017
PNC Bank, N.A. $ 25,000,000 9.090909090909
100 S. Broad Street
7th Floor
Philadelphia, PA 19110
Midland Bank, PLC $ 25,000,000 9.090909090909
140 Broadway
New York, NY 10005
Mitsubishi Bank, Ltd. $ 18,750,000 6.818181818182
225 Liberty Street
Two World Financial Center
New York, NY 10281
Societe Generale $ 18,750,000 6.818181818182
1221 Avenue of the Americas
New York, NY 10020
Citibank, N.A. $ 12,500,000 4.545454545455
399 Park Avenue
New York, NY 10043
GiroCredit $ 12,500,000 4.545454545455
65 East 55th Street
New York, NY 10022
Bank of Nova Scotia $ 12,500,000 4.545454545455
One Liberty Plaza
26th Floor
New York, NY 10006
Bank of Montreal $ 12,500,000 4.545454545455
430 Park Avenue
16th Floor
New York, NY 10022
Total $275,000,000 100.000000000000
</TABLE>
21
<TABLE> <S> <C>
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<S> <C>
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<PERIOD-END> SEP-30-1995
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<CASH> 5763
<SECURITIES> 3040
<RECEIVABLES> 296357
<ALLOWANCES> 12478
<INVENTORY> 260947
<CURRENT-ASSETS> 606113
<PP&E> 355479
<DEPRECIATION> 167922
<TOTAL-ASSETS> 936391
<CURRENT-LIABILITIES> 291053
<BONDS> 314421
<COMMON> 159
0
0
<OTHER-SE> 295554
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<SALES> 300474
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<CGS> 171740
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<LOSS-PROVISION> 551
<INTEREST-EXPENSE> 6937
<INCOME-PRETAX> 9061
<INCOME-TAX> 3123
<INCOME-CONTINUING> 5904
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</TABLE>
