Note 18—Business Segment Data

Effective July 1, 2015, we revised our business segments in order to better align them with our strategic approach to the markets and customers we serve. Prior period segment amounts throughout the consolidated financial statements have been reclassified to the new segment structure. The reclassification of historical business segment information had no impact on our basic financial statements.

The accounting principles applied at the operating segment level in determining income (loss) from operations are the same as those applied at the consolidated financial statement level. Goodwill was allocated to our segments based on the relative fair value of the components of our reporting units that were affected by our change in segments. Refer to Note 8 – Goodwill and Intangible Assets, Net for more information.

We design and engineer connected products and solutions, including connected car, audio and visual products, enterprise automation solutions and connected services for consumers, automakers, and enterprises worldwide. Our chief operating decision maker evaluates performance and allocates resources based on net sales, operating income and working capital in each of the operating segments which are also our reporting segments.

Connected Car

Our Connected Car segment designs, manufactures and markets connected car systems for vehicle applications to be installed primarily as original equipment by automotive manufacturers. Our scalable connected car platforms deliver enhanced and connected capabilities to the car, including intelligent high-performance navigation with embedded solutions for multimedia, premium entertainment tuners, and on-board and off-board connectivity that addresses a wide range of vehicle categories. Leveraging a software-driven computer platform, we offer an integrated suite of technologies that extends beyond infotainment to encompass telematics, connected safety, and over-the-air update capabilities. We also offer a comprehensive suite of automotive cyber security solutions through a multi-layer architecture that can protect not only future vehicles, but connected cars on the road today. Global customers for our connected car systems include BMW, Daimler, Fiat Chrysler Automobiles, Ford, Geely, General Motors, Hyundai, Qoros, Subaru, Suzuki, TATA, Toyota/Lexus, Ssangyong, the Volkswagen Group and Yamaha. We also produce an infotainment system for Harley-Davidson touring motorcycles.

Lifestyle Audio

Our Lifestyle Audio segment designs, manufactures and markets car audio systems for vehicle applications to be installed primarily as original equipment by automotive manufacturers, as well as a wide range of consumer audio products including mid-to high-end loudspeaker and electronics, headphones, embedded audio products for consumer electronics and branded portable wireless speakers. We believe that we continue to redefine audio excellence for the home, the car and on-the-go listening. Our Lifestyle Audio products are marketed worldwide under renowned brand names including AKG, Harman/Kardon, Infinity, JBL, JBL Professional, Lexicon, Mark Levinson, JBL Synthesis^® and Revel. We also have rights to use the Bowers & Wilkins^®, Bang & Olufsen^® and Canton^® brand names within the automotive space. Global customers for our premium car audio systems include Aston Martin, BMW, Brilliance, Chang’an, Daimler, Dongfeng, Fiat Chrysler Automobiles, Ford, Geely, General Motors, Great Wall, Hyundai, McLaren, PSA Peugeot Citroën, SAIC, Subaru, Tesla, Toyota/Lexus and the Volkswagen Group. Our car audio products feature innovative technologies such as Clari-Fi^TM, HALOsonic^TM and Quantum Logic Surround™. Our consumer audio products are sold in mass-market retail stores such as Apple, Best Buy, Target, Media Markt and Fnac, specialty audio stores, Harman stores, through online retailers such as Amazon.com, and directly online at Harmanaudio.com.

Professional Solutions

Our Professional Solutions segment designs, manufactures and markets an extensive range of audio, lighting, video and control, and automation solutions for entertainment and enterprise applications, including live concerts and festivals, stadiums, airports, hotels and resorts, conference centers, educational institutions, command centers and houses of worship. We offer a variety of products, including loudspeakers, amplifiers, digital signal processors, microphones, headphones, mixing consoles, guitar pedals, lighting, video and control, and enterprise automation solutions. Our Professional Solutions audio products are used at important events in prestigious venues, such as the GRAMMY® Awards, the Emmy® Awards, the Super Bowl®, the Oscars®, the MTV® Video Music Awards, the Country Music Awards® and Yankee Stadium. Our Professional Solutions products are marketed globally under a number of well-established brand names, including AKG, AMX, BSS®, Crown, dbx®, DigiTech®, JBL Professional, Lexicon, Martin, Soundcraft and Studer.

Connected Services

Our Connected Services segment includes the operating results of STC, Redbend, and our automotive services businesses. Our Connected Services segment creates innovative software solutions that integrate design, mobility, cloud and analytics and brings the benefits of the connected world to the automotive, retail, mobile, healthcare, media and consumer electronics markets. Our Connected Services segment offers services and solutions in order to help customers understand and visualize their data so they can make faster and more informed decisions, cloud-enable their businesses, support technical agility and exploit omni-channel strategies. Our Connected Services segment customers include BMW, Daimler, the Volkswagen Group, Jaguar Land Rover, Microsoft, British Telecom and Polycom.

Other

Other includes compensation, benefits and occupancy costs for corporate employees, net of reporting segment allocations, expenses associated with new technology innovation and our corporate brand identity campaign.

The following table presents Net sales, Operating income (loss), Assets, Goodwill, Capital expenditures and Depreciation and amortization by each reporting segment:

	Year Ended June 30,
	2016			2015			2014
Net sales:
Connected Car	$	3,101,838		$	2,911,166		$	2,626,354
Lifestyle Audio		2,137,752			1,812,579			1,576,789
Professional Solutions		1,014,463			1,048,964			853,144
Connected Services		694,307			380,992			291,855
Other		39			1,596			341
Eliminations		(36,723	)		-			-
Total	$	6,911,676		$	6,155,297		$	5,348,483
Operating income (loss):
Connected Car	$	359,255		$	294,121		$	159,567
Lifestyle Audio		266,655			196,138			169,416
Professional Solutions		69,775			102,002			114,057
Connected Services		35,293			40,492			36,938
Other		(150,951	)		(163,159	)		(150,251	)
Total	$	580,027		$	469,594		$	329,727
Assets:
Connected Car	$	1,931,762		$	1,396,618
Lifestyle Audio		1,076,340			1,243,135
Professional Solutions		1,139,989			1,122,209
Connected Services		1,378,976			1,452,962
Other		526,975			650,976
Total	$	6,054,042		$	5,865,900
Goodwill:
Connected Car	$	164,771		$	20,749
Lifestyle Audio		147,977			152,350
Professional Solutions		385,609			387,861
Connected Services		811,922			726,220
Other		-			-
Total	$	1,510,279		$	1,287,180
Capital expenditures:
Connected Car	$	94,114		$	117,318		$	91,472
Lifestyle Audio		51,820			40,669			43,007
Professional Solutions		28,144			21,263			12,532
Connected Services		10,013			7,513			35
Other		14,364			5,735			10,095
Total	$	198,455		$	192,498		$	157,141
Depreciation and amortization:
Connected Car	$	79,930		$	69,617		$	65,449
Lifestyle Audio		57,254			40,601			33,215
Professional Solutions		34,757			34,112			20,866
Connected Services		43,535			16,312			1,828
Other		8,534			8,589			10,970
Total	$	224,010		$	169,231		$	132,328

During fiscal years 2016, 2015 and 2014 we did not record any goodwill impairment charges. Refer to Note 8—Goodwill and Intangible Assets, Net for more information.

The following table presents Net sales and long-lived assets and net assets by geographic area as of and for the years ended June 30, 2016, 2015 and 2014. Net sales are attributable to geographic areas based upon the location of the customer.

	Year Ended June 30,
	2016		2015		2014
Net sales:
U.S.	$	2,220,546	$	1,930,526	$	1,626,814
Germany		1,571,405		1,696,559		1,722,739
Other Europe		1,442,740		1,141,343		969,021
Other		1,676,985		1,386,869		1,029,909
Total	$	6,911,676	$	6,155,297	$	5,348,483
Long-lived assets:
U.S.	$	420,338	$	642,197
Germany		275,912		134,841
Other Europe		247,590		320,884
Other		125,734		124,166
Total	$	1,069,574	$	1,222,088
Net Assets
U.S.	$	286,537	$	159,906
Germany		305,233		580,412
Other Europe		1,361,174		1,167,508
Other		499,529		485,000
Total	$	2,452,473	$	2,392,826