Harman Kardon 2007 Annual Report Download - page 38

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25
nonvested restricted stock compensation arrangements granted under the plans. This cost is expected to be
recognized over a weighted-average period of 1.13 years. As of June 30, 2007, there was also $1.3 million
of total unrecognized compensation expense related to nonvested restricted stock units granted under the
plans. This cost is expected to be recognized over a weighted-average period of 2.26 years. The revised
standard did require certain changes in our calculations and disclosures. See Note 11, Stock Option and
Incentive Plan, to our consolidated financial statements included in this report for additional information
regarding our stock-based compensation.
Results of Operations
Net Sales
Fiscal 2007 net sales were $3.551 billion, an increase of 9 percent compared to the prior year. The effects
of foreign currency translation contributed approximately $144 million to the net sales increase compared
to last year. Exclusive of foreign currency, net sales were 5 percent higher than the prior year. Each of
our three reportable business segments had higher net sales in fiscal 2007 compared to the prior year. The
growth in overall sales was primarily due to higher infotainment system sales to automotive customers,
strong growth in automotive aftermarket PND sales, higher multimedia sales in the consumer market, and
increased sales of our professional products enabled with the HiQnet protocol.
Net sales in fiscal 2006 increased 7 percent to $3.248 billion when compared to the prior year. The
unfavorable effects of foreign currency translation reduced fiscal 2006 net sales by approximately $85
million during the year. Exclusive of foreign currency translation, net sales were 10 percent higher than
fiscal 2005. The growth in net sales was primarily due to higher sales of infotainment systems to
automotive customers, strong sales of multimedia products, and increased sales in the professional
market.
We present below a summary of our net sales by reportable business segment:
($000s omitted) Fiscal 2007 Fiscal 2006 Fiscal 2005
Automotive $ 2,492,815 70% 2,237,632 69% 2,127,682 70%
Consumer 497,673 14% 492,977 15% 416,231 14%
Professional 560,656 16% 517,288 16% 486,976 16%
Total $ 3,551,144 100% 3,247,897 100% 3,030,889 100%
Automotive – Automotive net sales increased 11 percent in fiscal 2007 compared to the prior year.
Foreign currency translation contributed approximately $122 million to the net sales increase compared to
the prior year. Exclusive of foreign currency, net sales were 6 percent higher than last year. Since a
significant percentage of our sales are to customers in Europe, the majority of our foreign currency
exposure is in the Automotive segment. The growth in net sales was primarily due to higher shipments of
audio systems to Lexus for the LS460 and to Toyota for the Camry. We also had higher sales of
infotainment system to Audi due to a full year of production of the Q7 platform. Infotainment system
sales to DaimlerChrysler were higher than last year due primarily to supplying the Mercedes-Benz GL
Class. Automotive had lower sales to BMW, Landrover, Renault, Porsche and PSA Peugeot Citroën