Harman Kardon 2014 Annual Report Download - page 2

Chairman’s Letter
In terms of technology, HARMAN was named
as an Open Automotive Alliance (OAA) partner,
joining other founding members Audi, General
Motors, Honda, Hyundai and Nvidia. HARMAN
is among the first Google OAA member compa-
nies to develop reference software and hardware
for “Android for Automotive.” This project is an
extremely large commercial undertaking with the
potential to enhance the driving experience in
millions of cars. HARMAN systems also enable
Apple CarPlayTM and other apps that benefit from
an embedded infotainment solution.
We believe that HARMAN is the bridge
between Silicon Valley and the automakers, and
we are ensuring that new connected services
are brought into the car safely and securely.
HARMAN’s experience, expertise and focus are
key differentiators in this competitive market as
proven by ABI Research ranking HARMAN as the
#1 infotainment market supplier. Endorsements
such as this are meaningful but the most import-
ant ones come from our customers in the form
of repeat and new business, which demonstrate
the confidence that automakers have in our abil-
ity to serve their needs not only today, but also
in the years to come.
Lifestyle
In Lifestyle, revenue increased by 24% compared
to the prior year due to our continued momen-
tum in Car Audio and Home and Multimedia.
Growth in our Car Audio business was driven by
an increase in automotive production and higher
take rates. We won new awards from BMW,
Chrysler, Daimler, Lexus, Toyota, as well as
Alfa Romeo, Hyundai, Kia and Chinese automak-
ers Brilliance, Great Wall, Dongfeng, Chang’an,
Geely and SAIC. We also won a new award from
Ford for HARMAN’s HALOsonic ESS for hybrids
and electric vehicles, and new business in the
area of hands-free microphones from both Ford
• Revenues reached an all-time high of
$5.3 billion, an increase of 24% compared
to the prior year.
• EBITDA reached an all-time high of $555 mil-
lion, an improvement of 35% compared to the
prior year.*
• Earnings Per Share improved 43% to $4.41.*
• Automotive backlog of awarded business hit
an industry-leading $20.5 billion.
These numbers reflect a constant commitment
to innovation, quality, service and growth by
many people. They represent the contributions
of our exceptional board of directors that pro-
vides guidance on issues from strategic insights
and risk management to governance and suc-
cession planning, and they represent the hard
work of a 16,000-strong workforce that believes
HARMAN’s superior sound and light, and
seamless, secure connectivity, elevates your
experience – from the studio and stage to the
home, car and everywhere in between.
To Our Shareholders:
On behalf of the employees of HARMAN International, I am
incredibly proud of our record performance in fiscal year 2014.
Amidst a sea of great change in the markets in which we compete,
HARMAN focused on our five strategic pillars, executing with
diligence for our customers and delivering outstanding returns
for our shareholders:
Infotainment
Much of our financial advancements can be
attributed to our automotive businesses, where
we capitalized on robust demand for a connected
car experience. Our 24% increase in sales in
Infotainment was due to the expansion of the
Company’s production launches across car
lines, higher automotive production and higher
take rates. Among our many highlights in fiscal
year 2014, we secured new business awards
from global OEMs, including VW Group, Suzuki,
Yamaha, BMW, Jaguar Land Rover, Scion, Toyota
and Chinese automakers Geely and Chang’An.
We also were awarded business to develop
premium infotainment solutions for Bentley
and Maserati and in the fourth quarter won a
contract from Scania/MAN to develop our first
infotainment solution for commercial vehicles.
This award demonstrates the power and ver-
satility of our scalable hardware and software
architecture to meet the unique requirements of
commercial customers. These wins helped bring
our total awarded Infotainment business in the
year to $2.5 billion. As of June 30, HARMAN’s
Infotainment backlog of awarded business set a
HARMAN record and industry high $16.2 billion.
* Excludes restructuring and non-recurring items, a non-GAAP
measure. See reconciliation of non-GAAP measures in the
August 7, 2014, press release.