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So, this is a little bit of an overview of what we just accomplished in the past year. We will blast through those pretty fast and then we will move into some of these secular drivers of growth, it will appear in a moment.We had a very good year. No question about that. Just sort of to sum it up, everything in our business, in terms of infotainment, as well as in our professional audio business and even the consumer electronics business to a large degree is really about innovation in technology. It is a business that faces a lot of competitive pressure, you have got particularly in the automotive space, very strong buyers that exert a lot of power relative to the suppliers in the space and therefore technology really comes today at the end of it. We like to think that the infotainment business, in spite of its high R&D, is a unique business in the sense that it is differentiable, it does drive purchase behavior on the part of the consumer behavior and the OEMs recognize that and that’s why we feel very confident that we can march along in terms of our trajectory of expanding margins in what is a difficult business out of the 5% to 6% EBIT margin levels that we had, pretty downturn, I might add, which is a business that we inherited from four and half years, five years ago, to EBIT margins in the 10% plus range. A couple of things really drove that. It was the fundamental restructuring of the business from a cost standpoint. To get cost right was one of our four strategic pillars. We had 86% of our manufacturing cost base in high cost countries, read that as principally, Germany and the U.S. We had 985 of our application engineering, software engineers, approximately 3,000 plus individuals also in high cost countries, again, Germany and the U.S.
Today, we sit at about 50-50 in terms of our manufacturing (inaudible) best cost countries, it's not just about cost it's also about being efficient for growth and that’s a big movement in the right direction and we also, on the application engineering are about 60% now high cost instead of 2% or 40% best cost countries.You would expect that emerging markets with their higher growth rates, that those percentages will continue to favor the best cost split. So that’s one of the things in terms of getting cost right and also positioning for growth for the future. The other thing that we did in the business was to transform how we build these systems. Arguably, we were the originator of infotainment with the acquisition back in 1995 of the Becker Radio Company, the premium company in Germany, sole supplier to Daimler since the 50s, basically to fancy radios and DVD players with stocks and turn by turn navigation to them and that really became the beginnings of what, today, we know as the sophisticated embedded infotainment systems. So with that, basically, that basically that business had always been developed in a semicustom way, two and half years to three years, $50 million to $70 million per program and with their scalable platform which was a reinvention of how we build these systems where we modulize large sections of the component tree, but allow customization of the GUI, the graphical user interface and the human mechanical interface where the consumer really interfaces with the vehicle but not necessarily rewriting all of the software that underlies it, both middleware as well as applications. That allowed us to reduce that R&D time from two and half years to three years to twelve months to eighteen months and also reduce the R&D investment from $50 million to $70 million roughly, down to about $15 million to $30 million. So these are some of the major transformational changes over the last four years that the new management team has conducted with Harman. Read the rest of this transcript for free on seekingalpha.com