Financial Overview

(in million USD)

	FY ended Jun. 30, 2012	FY ended Jun. 30, 2011	Rate of Change (%)	Factors
Overall
Sales	4,364.1	3,772.3	15.7	-
Operating profit	300.2	190.1	57.9	-
Infotainment
Sales	2,401.6	2,088.6	15.0	1)
Operating profit	180.5	77.4	133.2
Lifestyle
Sales	1,330.8	1,087.3	22.4	2)
Operating profit	141.9	101.9	39.3

Factors
1) Infotainment
-The increase in net sales was driven by increases in new product launches, higher production volumes and extension of current product offerings on new vehicle platforms, partially offset by unfavorable foreign currency translation of 40.6 million dollars.

-The Company had a temporary increase in net sales in the first quarter of fiscal year 2012 due to the inability of one of its competitors to supply its customers, as a result of the Japanese disaster in March 2011.

2) Lifestyle
-The increase in net sales was primarily due to higher automotive audio sales in Europe and North America, surcharges to a certain automotive audio customers to recover increased costs on rare earth minerals and the addition of MWM Acoustics, partially offset by unfavorable foreign currency translation of 12.2 million dollars.

Contracts

<FY ended Jun. 30, 2012>

Product	Maker/Model	Remark
Harman/Kardon-branded audio system	BMW "X3", "5 Series", "6 Series", "7 Series"	-
Harman/Kardon-branded audio system	Daimler "Mercedes-Benz M-Class", "Mercedes-Benz GLK-Class", "Mercedes-Benz A-Class", "Mercedes-Benz B-Class", "Mercedes-Benz SLK-Class", "Mercedes-Benz SL-Class"	-
Audio signal processing technology	Volvo	-
Audio system, infotainment system	Geely's new mid-sized luxury SUV and the upcoming luxury sedan platform	-Combined business represents a record total of more than 500 million USD.
JBL branded 13-speaker audio system and next-generation infotainment platform	BAIC's new full-sized luxury sedan
JBL branded audio system	Tata "Aria"
Aha infotainment platform	Honda "2013 Acura RLX"	-
Harman/Kardon branded sound system	Daimler "Mercedes-Benz A-Class"	-
Harman/Kardon branded surround sound system	BMW "3 Series"	-
Infotainment system	Porsche "Boxster"	-
JBL Professional sound system and infotainment platform	Ferrari "F12berlinetta"	-
Harman/Kardon DSP amplifier	BMW "MINI Roadster"	-
JBL sound system	Peugeot "208"	-
Toyota Touch & Go multimedia system	Toyota "86", "Yaris Hybrid"	-
Next-generation infotainment system	Volkswagen "Golf", Audi "A3", Skoda "Octavia"	-Volume of the contract is estimated at about 1.25 billion USD.
Toyota Touch & Go and Toyota Touch & Go Plus multimedia system	Toyota "Yaris (Europe)", "Avensis (Europe)", "Prius (Europe)", "Hilux (Europe)"	-
Toyota Entune multimedia system	Toyota "Prius", "Camry"	-
JBL GreenEdge audio system	Toyota "2012 Prius", "2012 Prius+", "2012 Camry"	-
Mark Levinson audio system	Toyta "Lexus GS"	-
Lexicon-branded 17-speaker audio system	Hyundai "2014 Genesis"	-This program award represents an additional 140 million USD in revenue for the Company over the five years of the Genesis program
Harman Kardon-branded 12-speaker audio system	Ssangyong "2013 Chairman H"	-
A new audio system, Frontboss	Daimler "Mercedes-Benz SL Roadster"	-Co-developed by the Company and Daimler, places woofers in the footwell in front of the driver and passenger. This design uses the space between the Frontbass speakers and the vehicle chassis as a large resonating chamber.
New infotainment system	Volkswagen	-Extended its relationship with automaker Volkswagen Group to provide new infotainment systems. The award is valued at approximately 400 million USD. The new award will include new programs with the VW Group: the extension of Harman´s next generation infotainment product offering to further car lines in the fiscal year 2015, the extension of the infotainment system starting in fiscal year 2014.
10-speaker Infinity-branded system, VMAx rear-seat audio system, a powered subwoofer and an amplifier	Changan "CD101"	-
12-speaker audio system from its Infinity brand	"Kia" "2012 Optima"	-
JBL Professional sound system, infotainment system and navigation	Ferrari "458 Italia Spider"	-

Recent Development Outside USA

-In FY ended June 30, 2012, the Company's sales performance in the emerging markets was particularly dramatic, with steadily-increasing BRIC country sales led by a 42% increase in China. The Company has added nearly 3,800 employees in best-cost countries, highlighted by the opening of the Company's largest new manufacturing and R&D facility in Dandong, China, a new engineering center in Chengdu, China, and its second Chinese flagship store in Beijing. The Company will continue to add resources at its multiple development facilities in India and China, and the Company is strengthening its resources in Russia and Brazil as the Company pursues such milestone opportunities as the 2014 Winter Olympics, the 2014 FIFA World Cup, and 2016 Summer Olympics.

-The Company is advancing the integration of LTE module into infotainment systems and announced it is now ready to begin road tests through LTE-networked areas in Europe. Tests in the U.S. will follow. Test vehicles will be equipped with the infotainment system platform technology integrating an AirPrime embedded wireless module developed by Sierra Wireless. The Company started its collaboration with Sierra Wireless for 4G/LTE solutions a year ago. (From a press release on November 9, 2011)

Acquisition

-The Company announced the acquisition of MWM Acoustics, LLC, a provider of microphones and embedded acoustic solutions. MWM, based in Indiana, U.S. with additional operations in China, provides acoustic technology for automotive active noise control systems and Bluetooth headset / hands-free acoustic devices. MWM technology can be found in products from some car makers and suppliers such as General Motors and Magna. (From a press release on July 26, 2011)

Business Partnership

-The Company and Texas Instruments Incorporated (TI), a U.S.-based semiconductor manufacturer, announced a collaboration to bring TI's OMAP 5 processors to Harman's automotive infotainment platform. Together, TI and the Company will leverage the OMAP 5 processors' multicore architecture to bring experiences such as robust navigational tools, 1080p graphics, interactive Web streaming and more for automobiles. (From a press release on February 27, 2012)

Restructuring

-The Company announced that it will reorganize its Automotive and Consumer Divisions to create two new Divisions, Lifestyle and Infotainment. The Lifestyle Division includes AKG, Harman Kardon, JBL, Mark Levinson, Infinity, and Lexicon brands. The Company'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. Harman is supplying its infotainment systems for Audi, BMW, Chrysler, Ferrari, Fiat, Hyundai, Mercedes Benz, Porsche, Peugeot, Toyota, Volvo and Volkswagen. (From a press release on August 10, 2011)

Awards

-The Company announced that it has been awarded a Technology & Development Award by Toyota Motor Corp. The Company supplies the Toyota Touch & Go and Toyota Touch & Go Plus multimedia systems for the automaker's European models, including the new "Yaris", "Verso S", "Avensis", "Prius" and "Hilux". (From a press release on February 27, 2012)

-The Company announced that it was awarded Ferrari's Innovation Award. The Company introduced the QuantumLogic surround-sound technology with Ferrari "FF". (From a press release on July 25, 2011)

R&D Expenditure

(in million USD)

	FY ended Jun. 30, 2012	FY ended Jun. 30, 2011	FY ended Jun. 30, 2010
Overall	331.9	304.6	322.7

R&D Facilities

<China>
-In FY ended June 30, 2012, the Company established a new R&D facility in Dandong, Liaoning and a engineering center in Chengdu in China. The company maintains manufacturing and R&D operations in Shanghai; Suzhou, Jiangsu; and Shenzhen, Guangdong.

Patents

-The Company announced it has more than 4,000 patents and patents pending, with more than 200 patents issued and more than 250 patents applications filed worldwide in fiscal year 2011. (From a press release on April 30, 2012)

Technological Alliance

-The Company, Broadcom Corporation, NXP Semiconductors N.V. and Freescale Semiconductor announced the formation of a special interest group (SIG) the OPEN Alliance (One-Pair Ether-Net), established to drive wide scale adoption of Ethernet-based automotive connectivity. Jointly developed with BMW and Hyundai Motor Company, the OPEN Alliance SIG will address industry requirements for improving in-vehicle safety, comfort, and infotainment, while significantly reducing network complexity and cabling costs. (From a press release on November 9, 2011)

-The Company announced its participation in the ng Connect Program, founded by France-based Alcatel-Lucent. The ng Connect Program is a multi-industry organization committed to the development and deployment of the next generation of broadband services based on Long Term Evolution (LTE) and other ultra high bandwidth technologies. Within ng Connect, Harman's role will be to advance development around connecting the full range of digital devices and platforms, so that the automobile becomes an extension of both the office and the home. (From a press release on July 19, 2011)

Product Development

New platform for the entry level infotainment market targeting two-wheeler and four-wheeler applications
-The Company introduced a new platform for the entry level infotainment market targeting two-wheeler and four-wheeler applications. With its connectivity technology, applications running on Android/Apple or other smartphones can seamlessly connect to the infotainment system. The car OEM can now offer features usually meant for high-end Infotainment systems – features such as turn-by-turn navigation, Internet radio, Harman's AHA Radio and access to many more applications. The new platform was developed at the Company's India Development Center. (From a press release on January 9, 2012)

Sound system
-The Company announced its JBL Professional unit has developed a sound system for the new Ferrari "458 Italia Spider". Conceived for the "Spider", the 11 speaker system uses stiff, lightweight materials such as carbon fibre, Kevlar aramid fibre and aluminium. The Company also equips the Ferrari "458 Italia Spider" with the infotainment and navigation technology. (From a press release on September 13, 2011)

Supporting the Android Open Accessory Protocol
-The Company announced that it supports the Android Open Accessory Protocol. With the Android protocol built into the Company's automotive offerings, users can seamlessly control smartphone or tablet content – such as music, movies or navigation apps – through a car's dashboard or steering-wheel controls. (From a press release on July 12, 2011)

Capital Expenditure

(in million USD)

	FY ended Jun. 30, 2012	FY ended Jun. 30, 2011	FY ended Jun. 30, 2010
Infotainment	66.0	61.7	41.0
Lifestyle	23.7	18.1	2.7
Other	22.7	28.6	16.3
Total	112.5	108.4	60.0

Investment Outside USA

<China>
-The Company announced that it has inaugurated its new Dandong Manufacturing Facility, Liaoning Province, China, part of the Company's second wave of investment plan representing additional 100 million USD to bolster manufacturing and research capabilities in China. Two manufacturing facilities will be housed within the 460,000 square feet facility. The automotive factory at Dandong will produce advanced audio components and systems. The second operation in Dandong will house manufacturing for audio electronics and loudspeakers sold under a range of the Company's brands in the Professional and Consumer sectors. Dandong is the fourth Chinese city to house a Harman facility, as the company maintains manufacturing and R&D operations in Shanghai, Suzhou, Jiangsu province and Shenzhen, Guangdong province and employs more than 1,200 people in China. (From a press release on November 10, 2011)