Harman Kardon 2012 Annual Report Download - page 3

To Our Shareholders:
Fiscal Year 2012 was a period of continued, prof-
itable growth at HARMAN. We posted our eleventh
straight quarter of year-on-year improvement at
both top and bottom line, we booked multi-year
strategic business awards with leading customers,
and we continued to advance the agendas of
innovation and operational excellence that will
make HARMAN a stronger, more competitive
company year after year.
Net sales in fiscal year 2012 were $4.4 billion, an
increase of 16 percent from the prior year. Sales
increased in all three divisions and the Company
continued to gain share in selected markets.
Operating income in fiscal year 2012 was $300
million, an increase of 58 percent compared to the
prior year. Our cash and short-term investments
balance stood at $820 million at year end, and our
total liquidity of $1.4 billion gives us the continued
flexibility to meet our business obligations as we
pursue strategic opportunities for growth.
All three HARMAN divisions posted sales growth
during the year, fueled by dozens of new product
innovations, continued emerging markets penetration,
and aggressive brand marketing. The Infotainment
Division increased net sales by 15 percent and more
than doubled operating income. The Lifestyle
Division increased net sales by 22 percent and grew
operating income by one-third. The Professional
Division increased net sales by six percent while
strengthening its competitive position with new
production capacity in China.
HARMAN’s achievements during fiscal year 2012
are closely aligned with the Company’s defined
four-pillar strategy to grow our smart infotainment
solutions business, increase penetration of our
branded audio systems, pursue aggressive growth
in the emerging markets, and drive continued
improvement in our cost and capital structure.
As the year began, HARMAN announced a realign-
ment of its division structure – in order to recognize
the convergence of consumer electronic devices
across multiple markets, better leverage the public
mind share fueled by our premium brands, and opti-
mize reporting transparency for our stakeholders.
We partitioned our large Infotainment business as a
separate division to underscore the dramatic sales
and profitability improvements we are making in
this space, driven by HARMAN’s quick-to-market
scalable systems approach. We have also energized
the brand awareness that drives every HARMAN
business with new customer ambassadors including
Sir Paul McCartney, Jennifer Lopez, Tim McGraw,
Maroon 5, China’s Liu Huan, India’s A. R. Rahman,
and others.
Our Infotainment business achieved several signifi-
cant wins during the year, including a $2 billion
multi-year award from BMW, a $400 million extension
of our relationship with Volkswagen Group, and
more than $500 million in new emerging markets
business from domestic automakers such as China’s
BAIC, Changan and Geely brands, and India’s Tata
Motors. To meet the growing demand for entry-level
embedded infotainment systems, we also launched
a new scalable infotainment platform targeting
entry- and mid-segment vehicles.
Our Lifestyle division continued to support current
market trends with new product introductions
geared to the soaring popularity of smart phones,
tablet computers, and home theater entertainment.
We launched new branded audio systems for leading
automakers including BMW, Ferrari, Hyundai, Kia,
Mercedes, MINI, smart and SsangYong. Leveraging
the synergies between personal multimedia and
in-car infotainment, our Aha Radio brand rolled out
a new cloud-based service that will delight our
loyal customers with thousands of online music
stations, news, audio books, personalized traffic
reports, and audio-based social media interaction.
Five additional premium automakers embraced
the robust Aha platform.
CHAIRMAN’S
LETTER
HARMAN’s achievements
during fiscal year 2012 are
closely aligned with the
Company’s defined four-pillar
strategy to grow our smart
infotainment solutions business,
increase penetration of our
branded audio systems, pursue
aggressive growth in the
emerging markets, and drive
continued improvement in
our cost and capital structure.