Harman Kardon 2009 Annual Report Download - page 51

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Consumer net sales increased 7 percent in fiscal year 2008 compared to the prior year. Foreign currency
translation contributed approximately $33 million to the net sales increase compared to the prior year. Sales were
adversely affected by general economic weakness in North America and Europe. We also experienced significant
competition in North America across multiple product categories including multimedia, which contributed to
lower sales of iPod docking stations. In Europe, sales excluding foreign currency translation were higher than the
prior year due to the popularity of certain Harman/Kardon electronic systems and increased sales of multimedia
products.
Professional—Professional net sales decreased 21 percent in fiscal year 2009 compared to the prior year.
Foreign currency translation contributed approximately $15 million to the net sales decrease compared to the
prior year. The decline in sales compared to the prior year was due to the effect of the weak economy on both our
distributors’ liquidity and market demand.
Professional net sales were 9 percent higher in fiscal year 2008 compared to the prior year. Foreign currency
translation contributed approximately $13 million to the net sales increase compared to the prior year. Sales
growth was supported by an increasing number of HiQnet enabled products that provide audio professionals with
a centralized point to monitor and control complex audio systems. JBL Professional had strong sales of products
supporting the install, portable and tour sound markets. Harman Music Group had higher sales due to new
product introductions. AKG sales of headphones and microphones were higher than in the prior year.
Additionally, sales of Soundcraft and Studer mixing consoles were higher than the prior year, reflecting
successful new product introductions.
Other—Other sales decreased 10 percent in fiscal year 2009 compared to the prior year due to a decline in
sales in our QNX business which offers embedded operating systems software and related development tools and
consulting services used in a variety of products and industries.
Other sales increased 23 percent in fiscal year 2008 compared to the prior year due to an increase in sales in
our QNX business.
Gross Profit
Gross profit as a percentage of net sales decreased 3.7 percentage points to 23.3 percent in fiscal year 2009
compared to the prior year. Gross profit margins were lower than the prior year due to decreased factory
utilization associated with lower sales, product mix and the loss of Daimler business due to their decision to
move to dual-sourcing on select Mercedes models. Restructuring costs included in cost of sales were $8.7 million
in fiscal year 2009 compared to $3.8 million in the prior year which consists primarily of accelerated
depreciation expenses due to the closure of manufacturing facilities.
Gross profit as a percentage of net sales decreased 7.1 percentage points to 27.0 percent in fiscal year 2008
compared to the prior year. The decrease in gross profit margin was primarily related to several automotive
platform launches, increased shipments of lower margin mid-level infotainment systems to Automotive
customers, higher Automotive warranty costs and lower Consumer margins in multiple product categories.
Restructuring costs of $3.8 million, primarily related to accelerated depreciation, contributed to the decrease in
gross profit margin.
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