Harman Reorganizes, Post FY, Q4 Results

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Stamford, Conn. - Harman has reorganized its automotive and consumer divisions to create two new divisions, lifestyle and infotainment, and released its fourth quarter and fiscal year financial results.

Harman decided to reorganize its automotive and consumer divisions into lifestyle and infotainment divisions because, according to Dinesh Paliwal, chairman, president and CEO, "Consumers want simplicity, seamless portability and sound integration that fits their lifestyle. There is a clear convergence happening among consumer devices in the home, office, car and everywhere in between. Consumers no longer view these locations and personal mobile devices as separate domains, but as one, continuous ecosystem where the delivery of information and entertainment should flow seamlessly between them, anytime, anywhere, anyplace."

He added, "Harman is in a unique position to tie these technologies together and deliver products that provide the seamless digital ecosystem consumers are demanding."

Paliwal noted that in recent years, "We have eliminated over $400 million of unnecessary costs, optimized our global footprint, and positioned our business for growth. It is now time to align our company to best address a future that will be driven by advanced technologies in content creation, aggregation, distribution, and seamless delivery and connectivity among multiple devices."

Harman believes that it will create additional growth by combining the infrastructure and capabilities of its luxury home audio business with its market-leading position in branded car audio systems, which are featured in the premium vehicle segments of: BMW, Chrysler, Ferrari, Fiat, GM, Harley-Davidson, Hyundai, Jaguar, Land Rover, Lexus, Mercedes Benz, Rolls Royce, Subaru and Toyota.

To increase automotive audio take rates and lifestyle product sales, the company will launch a new, integrated marketing campaign intended to create synergy between its automotive and consumer products and brands, featuring global celebrity artists using Harman products. More details on the campaign and the artists involved will be presented at the IFA show in Berlin, Germany, in early September.

Harman's new infotainment division encompasses technology solutions for navigation, hands-free telephony, Internet and wireless connectivity, and a myriad of in-vehicle safety systems including camera, infrared and laser technologies.

This stand-alone division, with revenues of approximately $2.1 billion, the company said, will benefit from a focused management structure that will further improve operating profitability.

On the financial side net sales for the fiscal year were $3.8 billion, an increase of 12 percent compared to the prior year. Net income for the year was $135.9 million, down from the prior year's $164.1 million.

Net sales for the fiscal fourth quarter, ended June 30, was $1.03 billion, up from $850.7 million in the prior year. Net income for the quarter from continuing operations was $18.9 million compared with $18.4 million in the prior year.

In the consumer division net sales in fiscal 2011 were $420 million, an increase of 13 percent. Operating income was $7 million, a $4 million increase over the prior year. Net sales in the fourth quarter were $100 million, an increase of 24 percent. Operating loss in the fourth quarter was $5 million compared with an operating loss of $7 million in the prior year.


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