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CONSOLIDATED MANAGEMENT REPORT 2014 ——— 4. Research and Development Activities Overall, Sennheiser Group’s research and development costs increased by 6.4 percent in 2014 compared to the previous year. A total of 338 employees were employed in this unit (previous year: 323). 4.1 Research In the Consumer Division, research activities focused on innovative transducer concepts as well as their applica- tion in the future product portfolio. Research in the Professional Systems Division concentrated on continuing to develop the 3D immersive audio technology, which enables a new type of spatial sound experience. Several recordings were made as part of this work, including with the Berlin Philharmonic, as well as sound installations, for example the “David Bowie is” exhibit at Berlin’s Martin-Gropius-Bau. 4.2 Development The Professional Systems Division expanded its portfolio in 2014 in the area of conference systems with the ADN Wireless system. Focusing on speech intelligibility as well as product flexibility was crucial for the successful market launch. In addition, a system for small and mid-size conference rooms was introduced with TeamConnect. The all-in-one solution – consisting of a control unit, microphones and speakers – offers everything necessary to fully equip a meeting room for phone conferences. In the second half of 2014, the Professional Systems Division concentrated on wrapping up development for several digital microphone series: evolution wireless D1, AVX and SpeechLine DW, which will hit the market in 2015. With all three product lines, ease-of-use and profes- sional quality are in the spotlight: each system is self-configuring and features intelligent frequency manage- ment as well as automatic sensitivity adjustment. The systems target different customer groups: the evolution wireless D1 is designed for users in live music, AVX enables high-quality video sound recordings and SpeechLine DW is tailored to suit speech applications. Activities in the Consumer Division concentrated on the development of premium headphones especially for the lifestyle segment in the short and medium term, and audiophile products for the long term. Building on the success of the MOMENTUM headphones in 2012 and in light of current user and technology trends, a new version of these headphones was developed. Unveiled for the first time at the CES in Las Vegas in early 2015, the MOMENTUM 2.0 is foldable and its wireless version uses Bluetooth as well as Sennheiser’s own NoiseGard technol- ogy for active noise suppression. The new URBANITE headphone series specifically targets millennials and was launched in September 2014. The headphones won an iF Design Award in Gold for its innovative, robust design. 15

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