2011

An

nu

al R

epor

t

2011 Annual Report

In the depths of sound

0 – 20 Hz

www.sennheiser-annualreport.com

COVER PHOTOTo visualize infrasound, artist Martin Klimas used vibrating pigments on a loudspeaker membrane.

Infrasound has frequencies below 20 Hz. That is outside the threshold of human hearing.

080895 Printed in Germany

03

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hem

aS

Wel

l.”

Prof. Dr. Jörg Sennheiser

One Sunday in midsummer

1883, meteorologists ac-

ross the globe made a

most extraordinary discovery. It

was August 26 and barometers

around the world recorded the

same phenomenon. All within a

short period of time. Over and

over again. What had happened?

A wave had traveled the Earth. The Krakatoa volcano near

Sumatra had exploded and it was so loud it could be heard

4,800 kilometers away. The sound continued on from there,

radiating out as inaudible waves and circling the planet

again and again. It was likely the first simultaneous, world-

wide registration of the phenomenon we call “infrasound”,

or sound below the threshold of human hearing.

When we speak of “sound”, we usually think of acoustic

sound; perhaps an echo. But that is sound we can hear. As an

audio specialist, we want to break this stereotype. In our last

trilogy of annual reports, “Seeing, Feeling and Tasting

Sound,” we began introducing you to some unusual per-

spectives.

Now, in the first part of our new trilogy “In the Depths of

Sound”, marvel as we explore infrasonic frequencies from

0-20 Hz; sounds that are almost imperceptible to the human

ear. Next year, we will continue with the “Heart of Sound”

(20-20,000 Hz). To finish our trilogy, we will soar to the

“Heights of Sound” (20,000-200,000 Hz), another range we

aren’t able to hear. Ultrasound

emits the most extreme vibra-

tions and though our ears may

not register it as it silently pas-

ses by, not so the moth.

So, what’s in store for us in “In

the Depths of Sound”? To start

off, a bit of audible sound and vi-

brations. Even the German poly-

math Hermann von Helmholtz knew that “all sounding bo-

dies are understood in shivers.” He made the observation

that strong tones make us feel “the whir of the air surroun-

ding us.” But, that is not always possible. Some frequencies

are so low that we can only record them using state-of-the-

art technology. For instance, X-ray telescopes and infrared

cameras or our headphones and microphones. Many of our

high-end models register frequencies in the depth of the in-

frasonic range. Why, you might ask, when we can’t even

hear these frequencies at all?

We at Sennheiser firmly believe that our customers not only

want to hear sounds, they want to feel them as well. Our

goal is to achieve perfection in mapping the entire frequen-

cy range in the utmost detail. I hope you enjoy being “In the

Depths of Sound.”

05

Peter Claussen President

Integrated Systems

Dr. Andreas Sennheiser President, Supply Chain

Paul Whiting President, Global Sales

Dr. Heinrich Esser President, Professional Systems

Volker Bartels President, Corporate Services, and Speaker of the Executive Management Board

Peter Callan President Consumer Electronics

Daniel Sennheiser President, Strategy and Finance

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management Board

06

0-20 HzDIVE IN …

page 4ExEcutIVE maNagEmENt boarD

page 44autHors & artIsts

page 46mastHEaD & coNtact

page 472011 fINaNcIal rEport

0.0000000000000016 Hz… tHE lowEst NotE IN tHE uNIVErsEan astronomer explains how he discovers sound waves a million times below the threshold of human hearing.

page 12

10 Hz… IN tHE DEEp, tHE sEa sINgsSilent waters? Think again! The sea is resonating with strange music. a British researcher attends a whale concert.

page 20 18 Hz… tHE psycHo-acoustIcs of souND art Kristen Roos’ installations delve into the super- natural. The Canadian conjures up spirits in his machines.

page 34

sENNHEIsEr mobIlE augmENtED rEalItyExpErIENcE tHE augmENtED rEalItyof the articles in this annual report. Stories labeled with the augmented reality symbol offer additional multimedia.Here’s how: go to the android Market or apple app Store and download

the free app “Layer” onto your smartphone. Start the application on your mobile phone. Hold the camera of your mobile phone over the motif so that

it completely covers the picture.

20 Hz… tHE VIbEs of tHE cItyLocating a hum moving through the earth. Is man’s hearing better than ever thought before?

page 38

0-20 Hz… tHE fabulous worlD of ultra-souNDWe can’t hear it, but we can feel it. an essay on the mystery of frequencies below 20 Hz.

page 08

15 Hz… NEw york 

plays bassSmooth operator:

Studio interview with Stuart Matthewman,

producer and songwriter for Sade.

page 28

0.1 Hz… tHE HEartbEat 

of moNstEr storms positioned on top of the Zugspitze

and ready to save the world. an illustration of the prophets who

listen to storms and earthquakes.

page 16

augMenTedReaLITy

coNtENts

07

08

 0 – 20 Hz

To use a metaphor, sound – like light – can be “visible”

or “invisible”; it can be audible or sneak by completely

unnoticed. Whereas one listener might find a sound

loud, another may not. At the other end of the spectrum, an

animal can hear sounds that would go completely undetect-

ed by the human ear, such as a rogue wave, miles out at sea.

Infrasound and ultrasound are just such sounds.

Simply put, acoustics is the study of sound. Its scien-

tists, or acousticians, measure how sound waves are gener-

ated, transmitted and received. An acoustics engineer then

uses this information, for instance, to improve the sound

quality of a concert hall. To decrease the noise level in a

building, he can lower the level to reduce generation, put

barriers in place to hinder transmission, and increase back-

ground noise or suggest earplugs to block out reception.

Sometimes, an acoustician is simply interested in studying

the loss of generation and reception in order to predict the

strength of generation.

Psychoacoustics studies the psychological and

physiological responses associated with sound – its

emotions and associations – to better understand how

sound is perceived. For instance, what is it about the sound

of a Harley that makes it seem “powerful” or “expensive”?

To unravel this mystery, the acoustician may have to factor

in inaudible components such as its vibrations and very low-

frequency sounds.

It may seem like a paradox – after all, acoustics is

generally involved in measuring sounds we can actually hear

– but infrasonic and ultrasonic acoustics measures sounds

that have little or no acoustic perception, generally those

within the frequency range of 20 Hz to 20 KHz (cycles per

second). Frequencies outside this range are either ultrason-

ic (above 20 KHz) or infrasonic (below 20 Hz) and though

generally considered inaudible, this is open to debate. For in-

stance, the frequency range of infrasound can vary accord-

ing to its intensity and rate, and factors such as age, gender

and noise exposure can also play a role.

Infrasound is often accompanied by audible sound

emitted from the same source. Let’s take the “boom box

car” as a case in point. The reason we can hear it coming

down the road for miles is that air does not absorb low-fre-

quency sounds as well as it does high-frequency sounds.

That’s also why a plane produces white sound (a mixture of

sound waves over a wide frequency) when flying directly

overhead, and more bass (low frequency) as it moves away.

Low-frequency sounds not only travel further through air

than high-frequency sounds, they penetrate physical struc-

tures. The reason why a plane flying over your house will

sound very low and “rumbling” is because the building has

filtered out the middle- and high-frequency sounds.

Although virtually inaudible, infrasound and infra-

sound vibrations can have a dramatic physical impact. As

intensity and frequency increases, infrasound and its vibra-

tions can cause symptoms similar to what divers call “the

rapture of the deep”: nausea, dizziness, a loss of equilibrium

and disorientation, impaired judgment, speech and vision.

Infrasound can also increase blood pressure and heart

rate, or give an adrenaline rush. There’s good reason why

national and international standards have been put in place

to specify permissible levels of whole-body vibration and

infrasound.

Tossing and turning at night? Could be infrasound.

For instance, research is being conducted on the infrasonic

effect of wind generation. Though initial findings would

09

ESSAY

InAudIbLe WorLdMeASurIng THe

We may not be able to hear sound frequencies below 20 Hz, but we can feel them. Sometimes they rob us of sleep, sometimes they drive us into a frenzy and – sometimes – they save our lives. An essay on infrasound.

10

 0 – 20 Hz

found that infrasound can im-

pair whales’ hearing.

In building acoustics,

we normally measure frequen-

cies between 100 Hz and 5,000

Hz. My company tests the

Sound Transmission Class (STC)

of all types of architectural

materials – from walls, to

doors, windows, building fa-

çades and special barriers. even though our own state-of-

the-art, 200-cubic-meter reverberation chamber is accred-

ited to 80 Hz, that’s still way above the infrasound range.

Clearly, new procedures are needed to measure infrasound

in buildings.

Scientists and governments have long been looking

into whether infrasound can be used to detect weather pat-

terns and predict natural disasters, such as volcanoes and

tsunamis. by studying the “invisible” – in this case, the

inaudible – we might better understand our environment –

and save lives. ■

argue that the impact is likely low, there is some evidence

that wind farms may cause insomnia.

We went to the Metrodome in Minneapolis to better

understand the effects of subwoofers and their low-

frequency sounds at major concert venues. Pink Floyd and

the Steve Miller band, for instance, have their sound cranked

up as high as 130 dbA peak. The tremendous volume makes

it hard to hear so the musicians have to rely on feedback to

feel the low-frequency sounds so that they can stay togeth-

er. And it’s the infrasound and vibration blasting from the

subwoofers that makes the crowd “feel” the music.

Animals are tremendously sensitive to sound, and

there are some fascinating studies being carried out in or-

der to understand acoustic communication between mam-

mals. elephants and whales, for instance, can hear over im-

mense distances. Following the Indonesian tsunami in

2004, researchers wanted to find out whether the ele-

phants were able to sense the coming disaster and then

communicate it onward as they tried to break free of their

chains. Important research on the impact of infrasound

that is generated by naval submarines on whales has

t

HD 700The Hd 700 uses its amazing frequency range to paint soundscapes on widescreen.

Frequency response 8-44,000 Hz (-3 db)Transducer principle dynamic, openTotal harmonic distortion

≤ 0.03 % (1kHz, 1Vrms)

Weight 270 g

Sennheiser HD 700 reference Audiophile Headphones

AugMenTedreALITy

AutHor StEvEn J. orfiElD

–9.4 Steven J. orfield is the found-er of or-

field laboratories (ol) in Minneapolis, uSA. ol provides design, research and testing services for the architectural and research communities. ol designed the first American Sound Quality analy-sis system, which included evaluation of major professional audio headphones. After conducting thorough tests, ol de-cided to use Sennheiser headphones for all its studies on sound. Currently, or-field is using the new Sennheiser HD 700 whose specially tuned, high- efficiency converters deliver high sound-pressure levels and a vented magnet system that minimizes air tur-bulence and, with it, distortion. the American is also known for his anechoic chamber, which was awarded “the Qui-etest Place on Earth” by the 2005 Guin-ness Book of World records. the sound level in this chamber is -9.4 dBA.

ESSAY

12 13

 0.0000000000000016 Hz

Black-Hole acoustics

“The day I heard The

sound In The unIverse” lowesT sound

British-born Andrew Fabian is one of the foremost astronomers in the world. His specialty? Listening to the murmurs of the universe and observing its black holes. In doing so, he has discovered sound waves a million times below the limits of the human ear.

as an X-ray astronomer, I’m interested in studying

processes in the universe that release tremendous

amounts of energy – energy whose electromagnetic

radiation is dispersed across the universe to be recorded on

earth after its long cosmic journey. Though it might seem

similar to the study of stars, there is a huge difference be-

tween stars and the heavenly bodies I observe. The radia-

tion sources I study have temperatures in excess of 1,000

times that of stars. using the law of physics, we know the

radiation they emit also has a frequency of more than 1,000

times that of stars. whereas the electromagnetic waves

emitted from a star’s hot surface make it possible for us to

admire them against the dark expanse of the universe, the

shift in frequencies takes black holes out of the visible spec-

trum and into the range of invisible X-rays.

one possible source of such X-ray radiation is giant

gas clouds, which become extremely hot as they are drawn

into black holes. Black holes are the remnants of stars that,

after having consumed all their combustible fuel, collapse

under their own weight, as it were, into an extremely con-

centrated mass. If the same thing happened to the earth,

we would have to squeeze it into a ball with a diameter of

less than two centimeters! such an extremely concentrated

object has an incredibly powerful gravitational pull, suck-

ing in anything that wanders by – never to be seen again.

The so-called Perseus Cluster is around 250 mil-lion light-years away from Earth and comprises 1,000 galaxies.

such is the case with electromagnetic radiation and light.

nothing is emitted from a black hole.

as a gas cloud approaches a black hole, its gas par-

ticles reach a very high velocity and begin to collide violent-

ly against each other, creating temperatures in the tens of

millions, which are then emitted as X-ray radiation. These

X-rays, however, are absorbed by the upper layers of the

atmosphere and so never reach the earth’s surface. what

that means for astronomers is that we are only able to ob-

serve X-ray sources from outer space – for instance, with

the help of satellite telescopes.

The most powerful X-ray telescope right now is

Chandra, which was deployed by a nasa space shuttle in

1999. The Chandra is equipped with the most accurate mir-

rors ever polished, at the time costing some 400 million

dollars. By directing X-ray radiation onto a detector, much

like the sensors of a video camera, the Chandra has helped

us learn some truly amazing things about the universe in

recent years. one of them is that black holes emit an ex-

tremely low murmur.

The most powerful source of X-ray radiation ob-

served so far is a cluster of galaxies in the constellation of

Perseus. some 250 million light years away from earth, Per-

seus is made up of thousands of galaxies immersed in a hot

gas cloud. at the center of the Perseus Cluster is a black

0.0000000000000016

14

 0.0000000000000016 Hz

Black-Hole acoustics

and what is the fre-

quency of these sound waves?

a bubble that detaches only

once every ten million years or

so has an extremely low fre-

quency. To give an example,

let’s use Middle C as a refer-

ence point. a Middle C gener-

ates 262 shock waves per sec-

ond. Based on our readings,

we can conclude the tone gen-

erated by these space bubbles

is something like 57 octaves lower than Middle C. More

precisely, they produce a B-flat with the unimaginably low

frequency of 0.0000000000000016 hz – the lowest note

ever registered in the universe.

other than setting such outer-worldly records, our

observations have high scientific value. For instance, we are

now able to explain why gas clouds in the Perseus Cluster

remain hot. over the course of

time, after having expended so

much X-ray radiation, gas clouds

should have cooled down. howev-

er, with sound waves continuously

replenishing their energy, the

cloud temperature remains high.

our findings have other

practical implications. For in-

stance, cold gas clouds should give

birth to new stars; however, this is

prevented by the heat generated

by sound waves. In other words, if

it weren’t for sound waves, there

would be many more stars and

galaxies illuminating the universe,

making the skies a lot brighter!

sound waves help us resolve these

types of cosmological questions.

literally speaking, it’s enough to

make you “open your eyes and

your ears.” ■

1. Chandra is the most powerful X-ray telescope of all time 2. Shock waves in the Perseus Galaxy Cluster

cosmic events 

1000 the 64-year-old Brit andrew c. Fa-bian has witnessed sights most earth-dwellers might consider in-conceivable. a professor of astron-omy and head of the X-Ray astron-omy Group at the university of cambridge, he has received numer-ous scientific awards, including a Gold medal from the Royal astro-nomical society – its highest award. Fabian has been working in close collaboration with nasa and its chandra mission for many years. 

hole that constantly pulls in gas from the cloud. as the gas

plunges disk-like into the black hole, two jets of matter

shoot out in the opposite direction. The exchange can force

a part of the gas cloud outwards, creating two giant “bub-

bles,” each roughly the size of our Milky way. The Chandra

gives us a front-row seat on the action. as the hot gas in

the cluster begins to emit a very bright X-ray radiation, the

bubbles appear as two dark circles.

The bubbles grow larger with time. after, say, ten

million years, they detach and move away from the black

hole. Just like air bubbles in an aquarium: as its aeration

system pumps air into the water, it forms bubbles that

grow, eventually detach and rise to the surface. every time

one of these giant cosmic bubbles detaches, it acts like a

gigantic loudspeaker, sending out a spherically shaped

shock wave into the surrounding gas – a shock wave that

decays further out into sound waves. sound, after all, is

nothing other than a pressure oscillation in a material me-

dium – of which air is but one example.

of course we can’t hear these sounds on earth:

most of the universe is a void and so does not carry sound.

however, we are able to record the shock waves at the

Chandra observatory. density is higher in areas with higher

pressure, resulting in more X-ray radiation. That’s why sat-

ellite pictures taken of black holes reveal bright circular

structures similar to the concentric ripples that form on a

pond’s surface when you throw a stone into the pond.

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In outer space, a powerful bass drones: with the help of the space telescope Chandra, it was possible to detect sound waves from a supermassive black hole

15

0.1 0.1 Hz

EARLY WARNING

16

listening to thestorm’s heartbeat

They are the superheroes of meteorology. From atop a high

mountain, the German Aerospace Center warns the world of storms.

18

EARLY WARNING

 0.1 Hz

20

A love song

10 hertz: that’s how deep the booming bellow of the male humpback whale can reach. During mating sea-

son, the males use the power of song to woo the females they fancy. That makes the male whales – sea leviathans, up to 15 meters in length and severely scarred – true virtuosos of the ocean. They compose songs using up to 622 sounds, spanning an impressive range of ten to 8,000 Hz.

10LONESOME SINGERSOF THE ATLANTIc

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UnDeRWATeR HITs

In the dark abysses of the sea, whales send out low-frequency sounds that can be heard halfway across the ocean basin. British biologist Oliver Boisseau sails the Atlantic in search of these wondrous sounds – and to protect their leviathan vocalists.

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centuries ago and late at night,

as rum-sodden sailors lay in an

exhausted stupor in the ship’s

hold, listening to the planks creaking

and the wind whistling through them,

the strange sounds coming from the

depths of the sea must have been hor-

rifying. For these superstitious sea

dogs, there was only one logical expla-

nation behind the melancholy groans

that seemed to reverberate as if from

some supreme soundboard: it must be

a chorus of seamen, sobbing from

their watery graves. Riddled with fear,

some nights the sounds were almost

too much to bear. Worse yet was the

knocking. The spirits had more on their minds than singing

their hair-raising song of woe. They wanted in.

Sporting oval, wire-framed glasses and an ordinary,

no-nonsense haircut, English marine biologist Oliver Bois-

seau, 36, seems – well – so normal. That is until he begins

to revel in telling horror stories of the deep seas. His haunt-

ing tales, however, do serve a purpose. Recounting such old

sea lore is an excellent illustration of man’s ignorance of

these, his most favorite of creatures – the ancient masters

of the sea. It wasn’t until the 1930s, when dolphins first

went on show in aquariums, that man began to observe

marine mammals; it took another 10 or 20 years before sci-

ence slowly began to get itself into the act.

But it wasn’t until a good 40 years ago that man

began to analyze the whale’s poignant sounds. And as un-

derstanding grew, so too the realization that the ghostly

seaman’s lament were actually poetic songs used by some

species of whales to woo their female mates. The songs

broadcast relevant and detailed information as to their

size, strength and matrimonial intentions. And the knock-

ing sounds? A special sonar toothed whales use to locate

their prey.

Though research in this field is still in its infancy,

there is another reason why so little is known about

whales. Most of them tend to keep out of sight, preferring

to romp about in the unfathomable

expanses of the ocean. Relatively

easy to spot are the large baleen

whales. As captain Ahab in Moby-Dick

would say, “There she blows! The

white whale.” And indeed, a huge

fountain of water shoots into the air

as they exhale; a sight Boisseau can

see for miles.

It’s a completely different

story for the most mysterious of

these large marine mammals: the

beaked whale. Though they make up

almost 25 percent of the approxi-

mately 80 whale species, only four

species have been studied in any de-

tail. For some beaked whale species, the only proof of their

existence is their skeletal remains. But how many are there?

A question still in search of an answer, it will take more lis-

tening in on the deep to fit the different pieces of the puz-

zle together.

At 18, when Boisseau finished school, he took a year

off to do voluntary service. With his brother already work-

ing with wild animals in Africa, Boisseau was “looking for

something completely different to do.” And so began his

love affair with marine mammals. Over the course of the

year, Boisseau worked on whale-watching boats off the

Azores and assisted American doctoral candidates with

their research. The subject was always dolphins and whales.

But it wasn’t until fourteen years

later, in 2008, that Boisseau finally

spotted a live beaked whale. Surely

a baffling fascination given that the

object of his obsession remains so

elusive.

Today, a Ph.D. himself, Bois-

seau conducts his own months-long expeditions, now con-

sidered the most important in the field of whale research.

At the end of March 2012 and sponsored by the environ-

mental-protection-organization International Fund for Ani-

mal Welfare, Boisseau set sail to observe the Atlantic’s blue,

1. The 36-year-old marine biol-ogist Oliver Boisseau on the deck of the research ship “Song of the Whale.”2. Screams, piping, whimpers and grunts: hump-back whales sing their songs in verses of diverse sounds.

 10 Hz

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UnDeRWATeR HITs

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fin and sei whales. This summer,

he and his team will be traveling

from the Azores, a major inter-

section for whale traffic, to the

American East coast and the

last of the North Atlantic white

whales, and then on to Iceland.

Laid back and easygoing, his

boyish looks seem out of place

for a doctor of marine biology.

But whether standing on the

deck of the “Song of the Whale”

with his binoculars in hand or

sitting in front of LcD monitors

where green, blue and red

curves flitter across the screen seemingly at random, his

meditative calm and patient determination never falter.

In contrast to his usual T-shirt or solid-colored hood-

ie, Boisseau sports state-of-the-art headgear: black

Sennheiser HD 280 Pro headphones. The headphones are as

indispensible to his work as are his computers and binocu-

lars. Not only do they offer uncompromising quality, spare

parts are available anywhere in the world and they are ex-

tremely robust. “The environment onboard a ship is abso-

lutely unforgiving. Sea water sloshes around, equipment

gets dropped or slammed against the walls,” says Boisseau.

completing his equipment is a 400-meter (1,300 ft),

thumb’s-width cable fitted with two microphones, a depth

gauge and direction sensor, which is lowered into the water

1. The crew lowers the 400-meter-long cable into the water. The hydrophone is attached to the end of the cable. 2. The expeditions also serve to pro-tect the endangered finback whales. 3. In summer 2012, Boisseau sailed to Iceland via the Azores and the east coast of the USA.

and pulled behind the research ship. Though

these hydrophones – or as Boisseau calls them,

“my window into the underwater world” – have

been around for decades, they are still the best

technology around for localizing whale songs.

The “Song of the Whale” is a modern

21-meter (70-foot) boat that is powered by

both motor and sails and packed with scientific

instruments. Its hull is painted sea blue; its su-

perstructure and sails are brilliant white. Working onboard

in a mix of scientific research and animal preservation, Oli-

ver Boisseau and his team of marine biologists listen to the

whales and photograph the few less timid specimens, such

as the sperm whale.

Since sperm whales are uniquely identifiable by

their characteristic markings and scarring on head, body

and tail fin, their course can be tracked and each whale can

be positively identified. This helps them prove that whales

spotted off the mid-Atlantic islands of the Azores were re-

cently sighted off the coast of Norway. Once their migrato-

ry patterns have been established, the scientists put on

their animal-advocacy hats. The “Song of the Whale” is

headed for Iceland this summer to promote a ban on whal-

“Whale – there she blows!” Whales are rarely as easy to spot as this one shown here.

 10 Hz

26

UnDeRWATeR HITs

ing. Using the argument, for instance, that the

Azores have built a whole tourist industry based

on whale-watching, they plan to make a case that

there are more humane ways to cash in on whales.

For animal rights activists, the often sensa-

tionalized, brutal whale hunt is just one of the

whale’s many tribulations. Incredibly sensitive

hearing makes them particularly vulnerable to

noise. “Noise is as irritating to a whale as blinding

lights would be to us when we try to read or drive a car,” ex-

plains Boisseau. The steady increase in shipping, the noise

from pipelines and drilling platforms, the infernally loud

acoustic cannons used to conduct seismic studies of the

ocean floor, not to mention the sonar used by different mili-

taries to scan the floors of 80 percent of the world’s oceans

are pure torture to whales. The noise causes them to lose

their bearings, and drives them away from traditional feed-

ing and mating grounds. In the worst-case scenario, noise

can even kill them. Whales are so sus-

ceptible to noise that beached whales

are often found to have suffered cere-

bral or inner-ear hemorrhaging. “It’s a

tragic development that some species

could have died out before we ever

have a chance to get to know them,”

says Boisseau.

The team has another special

project planned for this year’s expedi-

tion. Using the latest soft-

ware, they will be able to re-

cord frequencies below 20 Hz.

Though usually inaudible to

the human ear, infrasound can

have a negative impact on

people’s moods and psyches.

Not so for other animals, such as giraffes and elephants,

which use these frequencies to their own advantage.

Whales use frequencies as low as 10 Hz; though fin whales

tend to use frequencies around 20 Hz and blue whales, 16

Hz. The sounds carry over truly mind-boggling distances.

Boisseau gushes, “A sound transmitted off the coast of Af-

rica can theoretically be picked up in the caribbean.” Male

humpback whales are the masters of these infrasound con-

certs. Recent studies show that, during the mating season,

the male humpback whale uses up to 622 sounds to com-

pose distinct, multi-strophic songs. And the frequency

range – 7 to 8,000 Hz – is staggering. Life on the

“the Song” can be lonely. Day in day out, nothing but blue

water. Nothing to hear, let alone anything to see. It’s a

seemingly endless waiting game. While the crew switches

out at regular intervals, Boisseau remains on board, watch-

ing, listening, waiting until – finally – he hears the groan,

cry and knocking that terrorized seamen of yore. The song

of the whale. ■

A gAMe oF PATIenCe

14 years long, the marine biologist and bioacoustician oliver Boisseau

traveled the oceans before he caught sight of one of the extreme-ly rare beaked whale. Boisseau re-ceived his Ph.D. from the University of otago, new Zealand. since 2004, he has been traveling the world with the IFAW research ship “song of the Whale.”

1. On board, Boisseau listens to the depths with his Sennheiser HD 280 2. The research ship is equipped with the most- modern technology 3. Blue whales com-municate with each other over thousands of kilometers, using infrasound noises

HD 280 PRoSturdy companion for loud environments. A favorite of researchers, DJs and sound technicians.

Frequency response 8–25,000 Hz Pick-up pattern Dynamic, closed Total harmonic distortion

0.1 %

Weight 220 g

sennheiser HD 280 PRo Dynamic stereo headphones

AUGMENTEDREALITy

28

 15 Hz

28

BASS SCHOOL

completely changedmy life” 15

SMOOTH OPERATOR

110 million: that’s how many  albums Stuart Matthewman  

has sold with the band Sade alone. Other  successes for the producer and multi- instrumentalist include soundtracks to films such as “The Astronaut Farmer”  and “Indecent Proposal.” As “Cotton- belly,” Matthewman plays jazz and  reggae. Whatever the genre, the power  of deep tones fascinates him – as does  music’s ability to make people laugh. 

 15 Hz

When Stuart Matthewman, aka “Cottonbelly,” makes music, you don’t just feel it. In an interview in his New York studio, the Brit talks about how his fascination with low tones converted him from punk to reggae – and how he uses psychoacoustics to inspire his listeners.

“Bass – it

30

 15 Hz

31

 15 Hz

BASS SCHOOL RUBRIK

 0,1 Hz

stuart matthewman hit the

international music scene

in 1984, when sade adu,

the most successful British artist

of all time, made her debut al-

bum Diamond Life. since then, he

has worked with sade and her

band as (co-)producer, songwriter, saxophonist and guitar-

ist. matthewman also performs under the pseudonym cot-

tonbelly. his latest work, Twin Danger, which he produced,

is soon to be released. in addition, matthewman composes

film soundtracks. the englishman has been living in new

york since the mid-80s. We visited him in his small record-

ing studio on the 6th floor of a large office building right in

the middle of manhattan.

Matthewman: Welcome to my studio. We’re on 29th street

in manhattan. sometimes, you can hear the sirens of police

cars and ambulances. it adds to the vibe of new york city.

apart from my studio, there are only offices in this build-

ing: management companies and lawyers. i try to keep qui-

et during the day and ratch it up at night. so far, nobody’s

complained. But my music’s good, right? so why would any-

one complain? (laughs)

Schnell: You’re a Brit - why did you move to New York?

i grew up in hull, a small town in northern england. in 1980,

i moved to london. i didn’t have any money and moved

from squat to squat. Back then, i was so broke that i was

actually stealing food. luckily during my first year in lon-

don, i met sade and the rest of the band. after we got a re-

cord deal, we were on the road all the time and were often

in new york. i fell in love with the city and stayed on. every-

thing i need is right here in new york.

The transformation from struggling musician to selling mil-

lions of records as part of Sade’s band went pretty quick.

it was luck and determination. the most important thing as

a musician, or as an artist in general, is to not have a back-

up plan. you have to know what you want. you cannot have

a second job or you will never follow through.

By now, you’ve worked with Sade

for almost 30 years.

We take off for ten years here

and there to do other stuff.

(laughs). We wouldn’t have last-

ed 30 years together if we didn’t

have room to do our own thing.

What other projects are you currently involved in?

i write music for movies. scoring films has a very different

dynamic from writing songs because you’re writing for

specific scenes to help the audience understand them.

my alter ego, cottonbelly, dubs music, and produces and

remixes for other artists like Janet Jackson and gregory

isaacs. my latest project is called Twin Danger. a jazz proj-

ect (don’t be scared, it’s good!) with an amazing singer

from new york named Vannessa Bley. We’ve got something

very cool going on. that will be happening soon.

Do you use Sennheiser microphones for your productions?

for recording the tom-toms on this drum kit here in the

back, i generally use the sennheiser md 421. it sounds

warm and round. for my saxophone, i use a sennheiser clip-

on microphone – both live and in the studio. also, i have

two neumann Km 184s. they are amazing for drum record-

ings – as overheads on the hi-hat – and they are great for

recording the acoustic guitar. i use them all the time.

Do you record your music in this small studio?

i do. since it’s so small, i usually use headphones to mix the

music. i don’t trust the sound of this room, but i trust the

sound of the sennheiser hd 640. they’re great! you hear a

lot of low end and they’re not too bright. you need a very

natural sound for mixing and the hd 640s have a very ac-

curate bass and high end. also, i love to walk through the

madness of new york or ride on the subway with head-

phones on.

Does Sade record her vocals in this studio?

no, but she also uses sennheiser equipment. for her vocals

in the studio, she uses the neumann U 87 ai. When we play

“I l

ov

e to

wa

lk

thr

ou

gh

th

e m

ad

nes

s o

f n

ew Y

or

k o

r j

ust

sI

t o

n t

he

sub

wa

Y.”

1. Cottonbelly sets up his Sennheiser MD 421 microphone. 2. The sound of Manhattan sur-rounds him with every step he takes.

32

 15 Hz

BASS SCHOOL

live, everything is sennheiser:

all the microphones and radio

packs – everything. since we

don’t have any monitors on

stage, we use in-ear-head-

phones from sennheiser. the

bass player also needs to phys-

ically feel the low end of his

playing. he has a little thing

that clips underneath the stage

and vibrates the floor so that

he actually feels the bass.

Is the bass particularly important for Sade’s music?

our records are very deep. We use a very low bass. almost

no sub-bass, but sounds that can actually be heard and – if

you have a nice sound system – feel. for live performances,

we add sub-bass sounds; for instance, for sound effects at

the beginning of the show, when you can hear explosions

and stuff. We put 16 subwoofers on each side of the stage

so that the audience can physically feel the low tones.

When paul [paul spencer denman] plays his bass live, the

subwoofers provide a much bigger sound live than what we

use for recordings. for us, it’s essential to have a very sepa-

rate, clean, low-end bass sound.

That reminds me of the low frequencies used in movies.

Ultra-low frequencies are used in movies all the time to

evoke certain emotions. the big dramatic low bass sounds:

“ta ta taaa…” to arouse fear. psychoacoustics are able to

manipulate the audience. not just sound, but the music

they hear also affects the audience. i have always been in-

terested in how to make an audience laugh or cry. ever

since i was a little kid. you can do that with music. i am fas-

cinated by film scores that are able to impact how the audi-

ence feels about a certain character.

In pop, low bass is usually used for positive effects. What

drew you to these “feel-good low frequencies”?

When i was 18 or 19, i played in a punk rock band in the north

of england. one night, we supported the reggae group steel

1. The Neumann KM 184s is Matthewman’s favorite microphone. 2. Measuring just 15 square meters, Matthewman’s studio is a very cozy space.

pulse. i managed to get on stage when they were playing

and sat behind the drummer. he had two massive subwoof-

ers on either side of him. all we could hear were his drums

and the bass, which must have been well under 15 hz. it was

an incredible feeling - one that completely changed my life.

The title of Sade’s album lover’s Rock is also a reference to

a ’70s reggae genre of the same name.

you’re right. living in london at that time, you heard reg-

gae everywhere. When i was a kid, we went to clubs that

played reggae all the time. often, the rooms were filled just

with bass speakers and tweeters. the sound was amazing.

it was physically impossible to stand still. the bass was so

powerful that you felt sick if you stood still. you just had to

dance. the bass took you to another place completely –

physically and mentally.

Is there anyone else in Sade that likes reggae that much?

We all like very different kinds of music. sade really likes

hip-hop; andrew hale, the keyboardist, likes esoteric dance

music. paul still loves punk and i’m into film music. But, we

all love reggae. Reggae is simple; it is stripped down. the

music is about getting the soul across instead of musicians

who are showing off. you do not listen to a reggae song to

be impressed by an amazing guitar solo. What the guitarist

does is simple and it sounds Right with the song. that is

exactly what we’re about. sounding right as a band and

not showing off as musicians.

KM 184on the studio scene, the kidney microphone has long been considered the quality standard.

frequency response 20 – 20,000 hzdirectional character Kidneynominal impedance 50 ohmsWeight 80 g

Neumann KM184 small microphone

aUgmentedReality

35

Psychoacoustics

 18 hz

the UndergroUndthe SoUnd from

Canadian artist Kristen Roos connects sofas to droning machines and uses subway trains as deep-frequency drums. For him, working with sound is a visual experience.

two black sofas vibrating in the lobby of an art galle-

ry. though subtle at first, the low-frequency thrum is

almost like listening to a lullaby. that is, until an

escalating quiver suddenly surprises the people sitting on

it. What is that sound? Is it emanating from some machine

close by? Is there something wrong with the building?

for Kristen roos, such reactions are music to his

ears. the Canadian artist is obsessed with the resonance

of these deep sound waves. “I love catching people off

guard,” he admits, “and making them think.”

take one of his earlier installations, for example:

subwoofers rock empty subway trains in a long-aban-

doned “ghost” station. “I’m fascinated by the deep dro-

nes,” laughs the 36-year-

old as we sit together on

his latest creation at the

Surrey Art gallery just out-

side Vancouver. “they

make me feel good. It’s

very meditative.” his curator feels the same. roos’ use of

infrasound has a decidedly otherworldly effect. the sofas

make it tactile, explains ross Birdwise, but it isn’t the same

feel as, say, holding an electric toothbrush. “You feel the

sound. It’s ghostly. As if spirits had been released from

their graves and have possessed the couch.”

It all taps into roos’ artistic calling: to make the

inaudible audible. for his show, Underground, roos was

able to achieve his vision using tactile contact combined

with Sennheiser mKh 8020 microphones. ross used the

ultra-sensitive microphones, which can record frequencies

beginning at 10 hz, to record the machine and electrical

rooms hidden in the gallery’s basement. the sound – rife

among archaic-looking gauges and copper coils – was first

sculpted and sequenced before being hardwired to the

sofas via tactile transducers and speakers. even though

the sofas muffle the noise somewhat, with the help of mi-

crophones, the underlying sound is transformed into

something more intense than they would have been in

situ. the result of the 15-minute-long loops? think: musi-

cal compositions. “there’s no doubt that I’m turning it into

something more pleasing than it actually is,” he continues.

“I think of it as manipulating the drone into a sound that

pleases me.”

for roos, it’s the idea of the underground writ

large. reminiscent of the futur-

istic film Brazil, these industrial

behemoths may look bizarre,

but – in his mind – these ma-

chines are “real beauties”. In

his 2007 exhibition Ghost Sta-

tion, roos recorded the moan-

ing and vibrating of subway

cars and sequenced them into

rhythms using subwoofers and

On the couch with a psycho-acous-tician: Distorting perception and the sense of uncertainty it evokes are just a few of the instruments sound magician Kristen Roos likes to play.18 sPiritual sound

6 haptic adapters, 8 laptop out-puts and 2 times 3 subwoofers in 6 empty subway cars. Kristen roos uses the equipment to  

conjure up modern-day ghosts. Just as he does in his project “Ghost station,” the sound artist uses deep bass sounds to keep his audience trembling. “We live in a surf of low-frequency waves,” says the canadian. “Many indigenous peoples believe them to be sounds from the  spirit world.”

36

Psychoacoustics

 18 hz

shaking nuts, bolts and springs on rods hanging from the

ceiling to create something akin to an eight-piece drum

kit. “Bringing sounds that people are usually not even

aware of to the surface,” he insists, “amplifies sound and

creates a whole new world.”

It’s a world he has longed for all his life. What with

cars, hip-hop and the experimental music scene, society is

already flooded with lower frequencies. But there is more.

It’s that depth of sound that attracted the father of one,

even as a toddler. “I used to press my head up against

washing machines and dishwashers,” explains the gradu-

ate of both Victoria and Concordia Universities. “they com-

forted me.”

Whatever the reason, over the past 15 years,

sound has brought him into collaborations with musicians

and dance troupes – and into honing the

sounds of the city to produce “soundwalks.”

In the micro radio Project he carried out in

Quebec City, roos created a counterpoint be-

tween resident’s voices, and recordings of

trains and church bells. thinking back over his initial flir-

tation with silkscreen, in which he would have to push and

pull multiple layers, roos can see a similarity to using a

multitrack to layer sounds. “Sound is a visual experience

for me,” he concludes.

Back at the art gallery, we’re still enjoying the ebb

and flow of his installation. ross plans to take the con-

cept even further in future projects. repurposing more

objects – such as a refrigerator that hums rhythmically in

tandem with a stove, for instance – to explore the tangi-

bility of their “seductive and captivating” low frequen-

cies. “It changes people because all of a sudden they can

actually feel something that they have never heard,” he

says as the sofa’s leather seats rise as if on cue to punc-

tuate our conversation. ■

1. In the bowels of the Surrey Art Gallery, the MKH 8020 is used to pick up sound. 2. Roos roams the machine room with microphones in hand in search of infrasound. 3. A ghost stop at the Lower Bay Station in Toronto, Canada.

MKh 8020the perfect microphone for organ, piano, double bass – and possessed machines.

frequency response 10 – 60.000 hzPick-up pattern omni-directionalnominal impedance 25 ohmWeight 55 g

sennheiser MKh 8020 condenser microphone

AUgmentedreAlItY

 20 Hz

20secret vibrations

the city and its

It’s like some mysterious music of the night. Around the world, a deep vibrating bass is robbing people of their sleep. Humming to the beat of air conditioners, cities are the worst offenders. As researchers studying this phenomenon are discovering: our hearing is much more sensitive than we ever realized.

NIGHT CONCERT

39

City as subwoofer: the droning of traffic, air conditioners and other machines keeps people awake. Especially in the “canyons” between buildings, such as here in Tokyo, a regular sound wave can occur.

40 41

NIGHT CONCERT

 20 Hz

at night, when the roaring city traffic comes to a halt

and the construction noise dies down. When the

world’s metropolitan areas finally turn down the dial

on the throbbing street life, most people are sound asleep.

others, however, are being tortured, tossing and turning in

bed.

sleepless in the city. around the world, from san

Francisco to auckland, from sydney to calgary, and in con-

gested urban centers like the five-million-strong ruhr val-

ley, there’s a deep hum that only 2 to 5% of the population

can hear. Like a power drill boring through their heads, an

uncomfortable sensation of pressure also builds up in their

ears. some feel a vibration course through their bodies, ex-

perience tremendous anxiety and even shortness of

breath. its audience has long known the title of this night

music: infrasound. at levels of 20 hz and below, why are

they able to register frequencies so low that, in the field of

acoustics, it would be considered absolutely impossible?

does infrasound really cause such harmful side effects?

in the outskirts of a city somewhere between dort-

mund and bochum, a teacher named anne Friedrich returns

to a home she was forced to flee during the night of Febru-

ary 23 last year. she couldn’t stand the hum any longer.

Prof. detlef Krahé of the University of Wuppertal has at-

tached a microphone to the headboard of her bed and con-

nected it to a sound-level meter. the mic is so sensitive, it

can record sounds down to 5 hz. every time she hears a low

tone that bothers her, she jots it down and then protocols

to what extent. Fuelled by his

scientific curiosity, the profes-

sor of communications engi-

neering is using her bedroom

to conduct research. is what

the teacher hears measurable?

and if so, when do the sounds

appear and at what levels?

in 2005, the 59-year-

old teacher with dark curly hair

bought a townhouse in the

ruhr valley. it wasn’t until mid-

september 2007 that she was

torn from her sleep for the first

time. “Wummwummwumm,” she

growls in a low voice. “it was like

there was a truck parked right in

front of the house, and the driver

was gunning the engine.” What’s

more, she could feel vibrations go-

ing straight through her. the mad-

dening bass tone is sometimes

weaker during the day, but she only

completely escapes it when she

leaves the house. odd that none of

her neighbors seem to notice.

Friedrich had all the build-

ing equipment and appliances thor-

oughly inspected. nothing. the first

hunch came from a building biolo-

gist: infrasound. the teacher points

through her front window: “there

it is. the bane of my life.” during

the summer of 2007, a new cooling

system had been installed in the warehouse across the

street and that’s exactly when the torturous sounds and

physical ailments first appeared. by February 2010, she

couldn’t deal with the insomnia anymore and fled her

home. today, she only returns to water the plants – or let

Krahé in to take measurements.

in Germany, denmark and canada, hum hearers are

banding together, forming associations, community groups

and internet forums. they are getting environmental au-

thorities and scientists on board, and keeping up with the

latest scientific research. it’s not just about bringing an end

to their suffering. they want people who don’t hear the

noise to know they aren’t just some crackpots, imagining

sounds that aren’t there. in the 1990s, the long-suffering

residents of taos, new Mexico were even able to get the

U.s. congress involved in what has become officially known

as the “taos hum”. but its genesis was just as elusive in

taos as it was in Munich and bristol: “it’s like trying to solve

a crime,” says Krahé of his difficult investigation to find the

culprits.

Krahé has finished studying the mea-

surements he took at Friedrich’s house: “i regis-

tered distinct peaks of 33 db at vibrations of 20

hz and 40 hz. but there were also noise compo-

nents below 20 hz.” noises? Frequencies below 20 hz are

generally considered inaudible. are official reference levels

misleading? Krahé adds with a sigh: “according to din

45680, these infrasound values are well below the thresh-

old of perception.”

acousticians at a university located in the danish

city of aarlsborg have come up with the same type of re-

sults. they have been conducting measurements in an in-

frasonic pressure chamber for years, looking to find out

how infrasound affects people. their surprising result,

which has been confirmed by many other international

studies and experiments, is that people are able to per-

ceive sounds well below the previously defined threshold

of 20 hz. if they are especially sensitive, they even react to

frequencies of just a few hertz. it’s a bit like the fluttering

heard when rolling down the window of a moving vehicle.

With sounds below 20 hz, there is no sensation of pitch,

but there is a sensation of sound. at least, for some people.

despite all the studies, there are still many open questions

and there will have to be more research. Foremost of all:

are there any negative health effects from infrasound?

What is the difference between infrasound and the

noise caused by high frequencies? acoustician volker Mel-

lert of oldenburg University has been researching infra-

sound since the 1980s. as he explains: “contrary to high

frequencies, the threshold of perception between barely

hearing something and hearing it loudly can be minuscule.

especially at very low frequencies. that’s why frequencies

in the infrasonic range can quickly morph into a major an-

noyance.” Mellert discovered how low frequencies can af-

fect the body the hard way. he and his team ran an experi-

ment on themselves. as the 5 hz emitting from

low-frequency loudspeakers in their anechoic chamber be-

gan to generate infrasound, they started to feel an un-

pleasant sensation of pressure and ran out of the room.

they all felt terrible – some were even about to pass out.

Mellert is convinced that artificial infrasound is

more disturbing than the infrasound produced by nature.

Machines generate “isolated single-frequency sinusoidal

low pressure fluctuations,” which can be very unpleasant.

natural infrasound on the other hand, such as the low-fre-

quency sounds of the ocean or wind (or, as Mellert de-

scribes them, broadband) are simply more pleasurable.

infrasonic waves up to 300-meters long can travel

almost unimpeded over large spaces. however, unlike high-

frequency noise, they are not absorbed by air or insulation.

as Prof. Krahé describes it, “it cuts through glass like a hot

knife cuts through butter.” in an experimental chamber,

Krahé demonstrates how infrasonic waves intensify sound

pressure. he hooks up his sennheiser Kh 870 subwoofer

NO

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1. Air conditioners often generate resonances that resemble those of deeply tuned organ pipes 2. Night in Hong Kong: cities in particular are susceptible to infrasound, due to their geometry

lOW fREQuENCY mICROpHONEs 

0.1 hertz is the lower threshold frequency that a high-frequency microphone can mea-

sure. professional sennheiser micro-phones of the mKH series work according to this process, which is today used only by sennheiser. It enables the construction of measuring devices for extremely low frequencies. Thus, in the 1960s, the low frequency microphone mKH 110 was  created. The acoustician Volker mellert used this microphone to detect infrasound sources. Its lower threshold frequency was 1 hertz. The sister model, mKH 110-1, can even go as low as 0.1 hertz. 

42

NIGHT CONCERT

 20 Hz

and uses it to emit low frequencies of 20 hz in the 36 m2

(387 sq. ft.) room; what acousticians call a “standing wave”

quickly forms. all of a sudden, the indicator shoots up to

more than 20 db. indoors, the pressure level produced by

infrasonic waves is much more intense than outdoors.

acoustics expert rüdiger borgmann, author of a

book on infrasound, confirms: “With their geometry, cities

are especially vulnerable to infrasound because the high re-

verberant building facades of urban canyons create stand-

ing waves.” so, too, the bedroom.

there are countless sources of artificial infrasound

in cities: almost every tall office building, residential com-

plex, hotel and hospital are equipped with air-conditioning,

ventilation systems and pumps. heap on other factors such

as planes, railroads, subways, power stations and all the

electrical equipment companies’ use: “as technology in-

creases, so will infrasound,” says borgmann. infrasound in-

teracts with the solid-state vibrations of cooling equipment

and machinery that, at levels below 20 hz, emit airborne

sound. some researchers believe it even amplifies it.

the oldenburg acoustician Mellert once ran a test in

which he took repeated measurements of air conditioners

in open-space offices. he found that the long ventilation

ducts and shafts used in tall buildings create resonances

similar to those of low-register organ pipes, forming a

standing wave. “Using the sennheiser high-frequency con-

denser microphone MKh 110, we were able to measure

sounds waves below 10 hz,” says Mellert. For him, the ver-

dict is still out on whether urban canyons can also produce

the same type of standing waves: “that needs to be stud-

ied further.”

back in the ruhr valley, Prof. Krahé is trying to crack

his latest infrasound case. Fitting a tiny sennheiser MKe-1

onto Friedrich’s ear, he hopes to better identify the low-fre-

quency sounds that are causing her so much grief. Krahé al-

ways comes up with new ideas to catch the culprit. Maybe

the key lies in the brain. that’s why he is running a series of

eKG tests in his anechoic chamber. he wants to find out

whether infrasound alters brain waves. if it does, then he

would be able to show how infrasound also impacts people

who aren’t able to hear the hum – and finally prove that

the vibrating city is not a figment of the imagination. ■

1. After dark, for some people, a mysterious night concert begins in the megacities 2. Professor Detlef Krahé researches with a Sennheiser KH 870 subwoofer

KH 870 the newest electronics and eight analog channels make for dry bass tones to 18 hz

Free field frequency response

18–300 hz, ± 3 db

bass 7.1 bass manager with 80 hz crossover

impedance electrically balanced

XLr, 8 x 13 kiloohm

Weight 47.1 kg

Neumann KH 870 active studio subwoofer

44 45

AUTHORS & ARTISTS

JEKYLL & HYDE Munich pho-

tography duo Jekyll & Hyde,

who specialize in still life and

interactive photography, felt

like they had been on a trea-

sure hunt. How could they con-

gruently x-ray the layers of a

headphone? Not the usual

project, it called for a new ap-

proach. In the end, all present

were convinced that after a

roughly eight-hour x-ray ses-

sion they would either have su-

per powers or have achieved

the maximum recommended

lifetime exposure to radiation.

Figuratively speaking, howev-

er, they couldn’t prove either

one or the other. Even if they

had tried it on themselves,

above proof.

JOHANNES KROEMER AND VANINA FELDSZTEIN The pho-

tographer and filmmaker John

Kroemer and Vanina Feldsztein

have lived in New York for al-

most twenty years. Shootings,

like the one they did with the

Sennheiser musician Stuart

Matthewman, are something

like the perfect workday. The

producer of the music group

Sade was “cool, nice and acces-

sible” – and his neighborhood

full of surprises: Before the

shoot, Kroemer photographed

possible locations to take the

portraits. On Bleecker Street in

NoHo, he snapped a picture of

an old man sitting in front of

his loft. It wasn’t until later

that they realized that this

man was none other than Rob-

ert Frank - the father of mod-

ern documentary photography.

LUCY HYSLOP For Lucy Hyslop’s

interview with Kristen Roos, it

was a case of artist and writer

mutually inspiring each other.

After a day spent test driving

the rhythmic hum of his new

installations in Surrey, British

Columbia, our author intro-

duced him to the word “thrum,”

now the working title of his fu-

ture sound work. For Hyslop –

following a 20-year career in

print from London’s Telegraph

Magazine to National Geo-

graphic Traveller – Roos has in-

spired her to venture into the

world of sound herself as a ra-

dio reporter for Monocle 24.

PAUL-PHILIPP HANSKE He

won’t be able to sleep well said

our author Paul Philipp Hanske,

who was visiting atmospheric

scientists at the environmental

research station Schneeferner-

haus on the Zugspitze. The al-

titude of nearly 3,000 meters

has the effect that the organ-

ism is constantly under strain.

It was just the same at night.

The lowlander was only able to

doze off after three movies

and two beers. Down in Mu-

nich, Hanske works for the

Süddeutsche Zeitung, the

Bayerischer Rundfunk, Nido

and Arte.

MICHAEL MEIER Michael Meier

has been publishing comics, il-

lustration books and prints in

his own independent publish-

ing house Rotopolpress since

2007. This is also where he pro-

duced his first comic “Die Men-

schenfabrik” (The human fac-

tory) based on a narrative by

Oskar Panizza, for which he

was recognized as the best

newcomer at the 2009 Frank-

furt Book Fair. His second major

comic book, “The Inferno,” has

just been published. As a free-

lance illustrator and cartoonist,

Michael Meier has drawn for

Ehapa, Le Monde Diplomatique

and GQ.

CHRISTIAN BUCK Sound waves

from the cosmos? Sounds that

travel through the void of the

universe? Author Christian

Buck was immediately on fire

about this topic – after all, in

his first life, the journalist was

a physicist and, even as a child,

was fascinated by the incom-

prehensible majesty of the

universe. All the more that his

interviewee was not only fa-

mous, but also had a typical

British humor.

THO

Ug

HTS

An

d e

xp

eRIe

nce

S O

f SO

me

Of

OU

R A

UTH

OR

S A

nd

AR

TIST

S pA

RTI

cIpA

TIn

g In

TH

IS A

nn

UA

l R

epO

RT

46

RUBRIK

 0,1 Hz

FINANZBERICHT 2011MASTHEAD & CONTACT 

ContaCtSENNHEISER ElECTRONIC GMBH & CO. KG

am Labor 1, 30900 Wedemark, Germany, www.sennheiser.com

CONTACT FOR pRESS RElATIONS AND pUBlICITy: Global Corporate Public Relations Manager, Edelgard Marquardt,

telephone: +49 (0)5130 600-329, e-mail: Edelgard.Marquardt@sennheiser.com

finanCiaL REPoRt2011

47

MasthEadpUBlISHED By: sennheiser electronic Gmbh & Co. KG, Wedemark, Germany

pUBlISHERS: Burda Creative Group Gmbh, Konrad-Zuse-Platz 11, 81829 Munich, Germany, www.burdacreativegroup.com

pHOTOS: Cover: Martin Klimas; p. 03 tom haller; p. 04-05 tom haller (7); p. 08-10 500gls; p. 11 Jekyll & hyde; p. 12 corbis/

science faction, tony hallas; p. 14 nasa (2); p. 15 ddp images/aP; p. 16-19 Graphic novel: Michael Meier; p. 20-21 avenue

images/agentur Bilderberg/Reinhard discherl; p. 22 olivier hess; p. 23 gettyimages/flip nicklin; p. 24 gettyimages/hiroya

Minakuchi; p. 25 ifaW, olivier hess, gettyimages/tui de Ray; p. 26 olivier hess, ifaW, gettyimages/flip nicklin; p. 27 Jekyll &

hyde; p. 28-32 Johannes Krömer (6); p. 33 Jekyll & hyde; p. 34 angela fama; p. 36 angela fama (2), sarah fay; p. 37 Jekyll &

hyde; p. 38-39 gettyimages/Michael hitochi; p. 41 Look/h + d. Zielske, gettyimages/imagemore Co.; p. 42 action press/Zuma

Press inc., albrecht fuchs; p. 44 Jekyll & hyde; p. 45 Michael Meier, Benno sänger; p. 50 tom haller

syMBoLs of ExCELLEnCE

to date, sennheiser annual reports have been recognized with 17 Corporate Publishing awards.

48 49

Financial RepoRt 2011Financial RepoRt 2011

101musicians from 33 countries uploaded videos on YouTube last year in a bid to join the YouTube Symphony Orchestra. The best of them demonstrated their skills at a concert held in the Sydney Opera House and supported by Sennheiser technology.

26,660,000people watched the 2011 Grammy awards on television. Sennheiser endorsees collected the music award in the five most important categories at the music event.

46.5 1,000 guests can be seated in the theatre of the Mein Schiff 2 cruise ship renovated in 2011. Sound is carried from the stage to the guests using Sennheiser wireless systems.

500,000MD 421 microphones have been manufactured to date. The classic microphone was launched in 1960 and inducted into the TECnology Hall of Fame in 2011.

centimeters is the size of the new MKH 8070 shotgun microphone. The microphone made its debut appearance at the American Super Bowl 2011 finals, one of the world’s largest sports events.

CONTENTS50 Report of the Supervisory Board

52 consolidated Management Report 201152 PreliminaryRemarks

53 EconomicDevelopmentsduringthe2011FinancialYear

63 RiskManagement

65 OutlookforFutureDevelopment

66 consolidated Financial Statements 201166 ConsolidatedBalanceSheetasofDecember31,2011

68 ConsolidatedProfitandLossStatementfortheFinancialYear2011

70 notes on consolidated Financial Statements 201174 StatementofAssetAdditionsandDisposalsfortheFinancialYear2011

82 CashFlowStatementfortheFinancialYear2011

84 StatementofShareholder’sEquityfortheFinancialYear2011

86 independent auditors’ Report

financial report 2011

RepoRt of the SupeRviSoRy BoaRd———the management of Sennheiser electronic Gmbh & Co. KG have compiled the Consolidated

Management Report and the Consolidated financial Statements for financial year 2011.

these were submitted on time to the Supervisory Board. the Supervisory Board dis-

cussed and approved the annual financial statements and the management report.

in the financial year 2011, Sennheiser Beteiligungs Gmbh, Wedemark, Germany, was again

responsible for the management of Sennheiser electronic Gmbh & Co. KG in its capacity

as general partner. the registered presidents of the general partner were volker Bartels

(Corporate Services and Speaker of the executive Management Board), dr. heinrich esser

(professional Systems), daniel Sennheiser (Strategy and finance), peter Claussen (integrated Systems as of

august 1, 2011) and dr. andreas Sennheiser (Supply Chain as of January 1, 2012). in addition to the above-

mentioned presidents, further members of the executive team were, peter Callan (Consumer electronics) and paul

Whiting (Global Sales).

the members of the Supervisory Board this year were dr. frank heinricht, andreas dornbracht and Johann

Soder; prof. dr. Jörg Sennheiser again served as Chairman. the Supervisory Board carefully monitored the de-

velopment of the Sennheiser Group during its regular meetings. Between these meetings, the Supervisory

Board was informed by the management about all important decisions, projects and business events, either

orally or in writing. 2011 was a year of change at all levels: the transformation of the former organizational

structure to a divisional structure developed within the framework of the aCt project. this led to in-depth dis-

cussion between the Supervisory Board and the management, focusing on the following topics:

– Special attention was paid to optimizing the significance, consistency and transparency of the financial fig-

ures in the reporting system when adopting the new divisional structure with its redesigned processes. Con-

centrating on the key aspects and a stringent focus on informative and detailed data quickly resulted in pre-

cise demands for the streamlined reporting. one example of this is that profit contributions from individual

markets, product categories and major orders are to be made visible and analyzable. the old reporting for-

mat will be used for this financial year to allow us to present clean annual financial statements; simultane-

ously, new reporting formats have also been proposed and discussed, with the objective of using these in the

following years.

– the Sennheiser family compiled a family charter over the course of the past two years. this contains key val-

ues of the family members as well as the family’s clear commitment to the Sennheiser family-owned compa-

ny and its management. the Supervisory Board very positively acknowledged this important document as it

represents a prerequisite for a cooperative spirit between the family and the company clearly showing the

mutual responsibilities.

– over the course of the year, the Supervisory Board dealt in depth with the development of our subsidiary in

Japan. after preparing three alternative scenarios, a decision was reached together with the management to

realign Se Japan with a clear selective, growth-oriented nature. this more clearly defines the opportunities

available in Japan for Sennheiser as a premium supplier, allowing them to already be implemented success-

fully this year.

– a proposal was made, discussed and resolved to create a risk management function within the Strategy & finance

division aiming to obtain neutral assessment of all markets and future risks. the competencies and reporting lines

have been set up, ensuring the independence of this function in the interest of the entire company.

– this financial year saw the gradual implementation of the aCt divisionalization project; reports were regularly

presented to the Supervisory Board. the project was completed, as planned, at the end of the year thanks to

specific and outstanding commitment of all members of the executive Management Board as well as all other

managers involved. this forms a prerequisite to bring the divisional structure to life in the coming financial year.

– Several reports were made on the topic of divisional strategies, which were then discussed in depth; further

steps have been taken to bring these strategies to life. the Supervisory Board placed particular emphasis on

designing the divisional strategies to comply with the company’s overall strategy. the strategies of Consum-

er electronics, integrated Systems and professional Systems in particular were presented and discussed in de-

tail. the Group’s Lighthouse 2016 strategy served as the target and benchmark. the continuous strategy pro-

cess was initiated in the new structure and will be assessed, developed and carried out at scheduled times.

2011 saw planned turnover and profit far exceeded. the Supervisory Board would like to thank all employees

and members of management for this extraordinary success in a year marked by structural change and a

difficult global market environment. the Supervisory Board considers our company to be well positioned and

prepared to meet the challenges that will face us in coming years.

auditing firm deloitte & touche Gmbh again audited the Consolidated Management Report and the Consolidat-

ed financial Statements for financial year 2011. Both have been confirmed unconditionally. the Supervisory

Board has ratified the auditors’ reports, and therefore recommends that the shareholders accept and approve

them.

Wedemark, Germany, May 14, 2012

prof. dr. Jörg Sennheiser, Chairman of the Supervisory Board of Sennheiser electronic Gmbh & Co. KG

5150

consolidated management report 2011

52

consolidated management report 2011

53

consolidated management report 2011

——— preliminary remarks

as a parent company, sennheiser electronic gmbH & co. Kg is obliged to draw up consolidated financial

statements.

the company’s production sites are located in Wennebostel (germany), tullamore (ireland) and albuquerque

(new mexico, Usa). While Wennebostel chiefly manufactures wireless and wired microphones and microphone

capsules, monitoring systems and headsets, the plant in albuquerque concentrates on wireless microphones

and monitoring systems. the tullamore facility manufactures headsets and headset transducers. the company

has a branch office in singapore that manages the functions of product management, marketing, purchasing

and part of product development for the consumer electronics area.

Besides the parent company sennheiser electronic gmbH & co. Kg, the sennheiser group includes six subsidiaries

within germany and 18 subsidiaries abroad, as well as the joint venture sennheiser communications a/s, based

in copenhagen, denmark.

———economic developments during the 2011 Financial year Overall Business Developments and Development of the Industry

2011 GlOBal EcOnOmy

global economic growth slowed considerably in 2011. recovery has been muted by structural weaknesses,

especially in terms of debt and high unemployment prevalent in many industrialized nations, as well as natural

disasters and political crises. the Japanese economy has now recovered following the slump in production in

the second quarter, while the downfall of regimes in north africa only slightly impacted the global economy.

overall, the world remains divided into the fast-growing emerging markets and the sluggish economies of the

Western industrialized countries. in global terms, price inflation peaked in 2011 although significant inflation

risks remain in the fast-growing emerging markets.

central banks worldwide are using declining price inflation and the dampened economic outlook to loosen the

fiscal reins in the second half of the year. the fiscal policy pursued by the Us Federal reserve remained expansive,

which likely weakened the Us dollar, although it did profit from its status as a global and reserve currency despite

a downgrading of Us government bonds by a leading ratings agency. the debt crisis once again put pressure

on the euro in the second half of the year. currency values in many countries, especially in eastern europe, which

again added fuel to the debate regarding a currency war with protectionist government measures, fell in

response to the flagging global economy and concerns surrounding the public finances of industrialized coun-

tries, the economies of which are marked by weaker growth.

the global economy will again weaken in 2012, although the extent of the downturn is associated with consider-

able risks. the slump in consumer demand in most industrialized countries, in combination with fiscal austerity

programs and a lack of confidence in the decisions being made by those in power, makes the economic uncer-

tainty expected for 2012 appear extraordinarily high. according to calculations by iHs global insight, the global

economy is likely to grow by 2.7% in 2012, down from that seen in 2011 (3.0%). Had the Japanese economy not

recovered following the tsunami, thereby giving growth a boost, global growth in 2012 would have been even

lower.

the risk of a worldwide recession has increased slightly but remains moderate. this is based on the assumption

that the high level of growth experienced in china does not come to a sudden and abrupt end and that the crisis

in the eurozone does not then bring about the collapse of the european economic community. While Us economic

growth will remain relatively weak, europe, and the eurozone in particular, will find it very difficult to avoid

sliding into a mild recession. the debt crisis will continue to plague the financial markets in 2012, with the risk

of greece exiting the eec rising considerably. However, the collapse of the entire eurozone remains unlikely.

ThE EurOpEan unIOn

the economic recovery from the financial market crisis observed in europe since mid-2009 peaked at the begin-

ning of 2011 but weakened gradually over the course of the year. gross domestic product in the european Union,

and particularly in the eurozone, in all likelihood declined in the closing quarter. this development in 2011 is due

in part to the above-mentioned economic slowdowns in the Usa as well as in key emerging markets, especially

china and Brazil. most european countries also changed from a course of expansive fiscal policies in 2009/10

– resulting from various aid programs and the acceptance of recession-triggered tax revenue shortfalls – to

ones of consolidation in order to get a handle on extensive budget deficits. the main cause of all this, however,

is the deepening eurozone debt crisis.

nevertheless, it should be remembered that the european economy was in the grips of a mild recession at the

turn of the year. this is due, on the one hand, to increased efforts by most european countries to cut budget

deficits and introduce structural reforms in a bid to improve competitiveness. on the other hand however, there

is a relatively high level of distrust among banks, many of which are being forced to strengthen their equity

bases by mid-2012 in response to eU banking supervisory authorities’ requirements. this will at the very least

hamper lending in europe in 2012.

[ development ]

[ development ]

[ oUtlooK ]

consolidated management report 2011

54

consolidated management report 2011

55

the disparities regarding economic developments in europe identified in 2010 worsened in 2011. While countries

such as germany, austria, Finland, Belgium, luxembourg and, to some extent, France and the netherlands,

enjoyed robust economic growth, the economies in southern europe stagnated or were even already in the grips

of recession, as was the case with greece and portugal. the main reasons for the widening gap are increasing

differences in competitiveness, as revealed by the 2008/09 financial crisis, as well as varying levels of public

finance consolidation needs.

the development of the eurozone government debt crisis is the decisive uncertainty factor for 2012. in spite of

some encouraging developments at the end of 2011 – a greater willingness to reform following changes in

government in greece, spain and italy; and falling government bond yields in the case of spain and italy – the

bankruptcy of the greek state cannot be completely excluded.

on the other hand, there were signs in 2011 of stronger Us economic growth as well as at least a stabilization

of the business climate and consumer confidence in europe. the declining inflation at present, which also allows

the ecB to further loosen the fiscal reins, is also expected to give the european economy a boost. However, iHs

global insight believes that this will only prevent the recession from deepening.

GErmany

germany’s economy posted above-average performance in 2011; however, not even germany was able to

completely avoid the downward spiral resulting from a weakening of global economic momentum and the

exacerbation of the european government debt crisis. the first quarter was very strong (up 1.3% year on year),

due in part to a mild winter, although the following two quarters saw significantly weaker growth averaging at

0.4%.

despite this, the german economy demonstrated remarkable resistance, with the domestic economy and exports

also proving to be of note. although the pace of export growth slowed in the course of the year as against 2010

and at the beginning of 2011, the third quarter still saw 8.0% year-on-year growth. in addition, export growth

pretty much kept pace with import growth, meaning that exports ultimately made a positive contribution to

gdp. at the same time, investments continued to grow, at least until the third quarter; private spending in 2011

grew by almost as much as in 2006 (approximately 1.5%), outpacing every year since 2001. this relative strength,

which is also reflected in consumer confidence and still remained above the long-term average at the end of

2011, lies in the exceptionally robust labor market. the latest data for december shows falling unemployment

figures and rising employment and vacancies. there have to date been no signs of wage growth easing.

german industry capacity utilization saw above-average growth until mid-2011 and only fell slightly in recent

months. macroeconomic indicators, such as the purchasing managers’ index or the ifo business climate index,

fell by less than half that seen in 2008/09. this means that the german economy overall started 2012 relatively

robust.

the expected slight gdp decline in the winter half of 2011/12 will cause average growth rates to plummet from

the 3.0% seen in 2011 to only 0.2% in 2012, but this oversubscribes forecasted growth momentum losses.

assuming that the eurozone will not see a completely disordered insolvency and/or greece leaving the euro, the

region is likely to once again experience a recovery from the second quarter of 2012. this will be due in part to

the expected renewed increase in growth rates in the Usa and key emerging markets.

private spending may cool but is not expected to crash. there are also no signs of a sudden deterioration in the

labor market or rapidly falling pay deals. on the other hand, the german government has already indicated that

it would increasingly subsidize short-time working, an extremely successful instrument introduced following

the shock of the lehman collapse, in the event of an unexpected renewed slump on the labor market. this would

mean a stabilization of expected income as well as a boost to consumer spending. even if investments in 2012

were to weaken for a time, this would be nowhere near as bad as the collapse seen in 2009. the same also applies

to exports, meaning that the worst that could happen is that net exports have a moderately dampening influ-

ence on gdp growth.

ThE SITuaTIOn Of ThE ElEcTrIcal anD ElEcTrOnIcS InDuSTry In GErmany

2011 saw the continuation of the previous year’s strong recovery following the 2009 collapse. as a result, the

Zvei estimated that the real output of the german electrical and electronics industry rose by a further 13% in

2011, after growth of 13.8% in 2010 and a 20.3% decline in 2009.

turnover, which had slumped by more than 20% in 2009, has not yet returned to pre-crisis levels. there was also

a relative shift in focus towards domestic customers, as turnover from business with foreign customers fell from

17% in 2010 to 6.0% in the period from January to november 2011; turnover from business with domestic

customers also declined, from 10% to 8.0%.

Falling growth rates for incoming orders and turnover show that output growth is likely to weaken further in

the coming months. the above-average weakening of sales outside germany against sales in germany in 2011

is due to the declining pace of growth in the (asian) emerging markets as well as the government debt crisis in

[ oUtlooK ]

[ oUtlooK ]

[ development ]

[ development ]

consolidated management report 2011

56

consolidated management report 2011

57

the eurozone. the noticeable drop in the value of the euro observed since september 2011 will give exports a

boost from 2012 on. capacity utilization in the electrical and electronics industry, which rose from a low of 70%

in mid-2009 to a cyclical high of 86.3% in July 2011, has fallen slightly recently to 85.2% (as of october 2011).

this level of capacity utilization is therefore approximately midway between the record value of 88% seen in

2008 and the long-term average of 83%.

the sub-index of the ifo Business climate index for the electrical and electronics industry fell in december 2011.

after having reached its highest level since german reunification at the beginning of 2011, expectations for the

next six months and from midyear also diminished the assessment of current conditions. in december 2011,

10% of companies expected an increase in business activities, 61% believed that business activities would remain

unchanged and 29% projected business to decline in the coming six months. remarkably, the assessments of

current conditions at the end of the year were still very positive and not much down from boom year 2007.

added to this was an improvement in december on november.

all told for 2012, the most recent decline in incoming orders and overall negative expectations most likely mean

that output will see a much reduced increase as against 2011. Zvei forecasts output growth of 5.0% in 2012

after 14% in 2011. this is entirely realistic given standard lag effects and the strong level of incoming orders

seen until mid-2011; however, this can only be the case if the government debt crisis in the eurozone does not

experience a serious escalation in the form of greece becoming insolvent or the country even exiting the euro-

zone. However, in the medium term, the lack of engineers resulting from demographic factors will exacerbate,

which will likely have a limited impact on order acceptance and therefore on turnover growth.

aSSET, fInancIal anD OpEraTInG pOSITIOnTurnover and Operating position of the Sennheiser Group

the sennheiser group closed financial year 2011 with total turnover of €531.4 million and successful turnover

growth of 14% against 2010. although the increasing strength of the euro against the Us dollar over the course

of the year pushed turnover growth in the americas region down to only 6%, this trend was offset to a significant

degree by above-average growth of 15% in emea. in particular, the northern and eastern european sales regions

saw above-average growth of 22% and 52% respectively. although turnover growth was low overall, the extraor-

dinary developments in the apac region of 22% also made a significant contribution to sennheiser’s turnover

growth. in terms of the distribution of percentile, turnover growth posted by the individual product segments,

the sennheiser communications business division as well as professional headphones and wireless microphones

played a vital role with average growth of more than 20%.

[ oUtlooK ]

[ development ]

TurnOVEr

(€ millions)

change from previous year, in percent

500

400

300

200

100

0

2007 2008 2009 2010 2011

395.3 385.8

–2.4 %389.9

+1.1 %

468.2 +20.1 %

531.4 +13.5 %

TurnOVEr By rEGIOn

(€ millions)

change from previous year, in percent

500

400

300

200

100

0

2009 2010 2011 2009 2010 2011 2009 2010 2011

americas EmEa apac

13.3 +22.3 %

41.9 +14.8 %

8.0 +6.4 %

99.3125.6 133.6

246.5282.9

324.8

germany88.7 (16.7 %)

44.0 59.7 73.0

consolidated management report 2011

58

consolidated management report 2011

59

at €58.6 million, results from ordinary activities are up a significant 53.3% on the previous year. at €2.6 million,

results from ordinary activities in the year under review were impacted by higher as the usual level of amortiza-

tion of current assets. this effect, as well as the €5.7 million increase in personnel costs, was more than offset

by a €12.1 million decline in material costs as well as the €1.1 million fall in other operating expenses, with the

result that eBit in relation to turnover for 2011 amounted to 12%.

For 2012, we expect that the divisional reorganization of the sennheiser group completed last year into the

consumer electronics, professional systems and integrated systems business divisions will continue to enhance

sennheiser’s customer orientation. We expect turnover and results to continue on this course in the medium

term despite rising market uncertainty.

asset position

the balance sheet total increased from €278.0 million in the previous year to €315.1 million in 2011, primarily

on account of a rise in current receivables as well as cash and cash equivalents. the extremely positive develop-

ment experienced by the company over the course of 2011 helped to reduce the value of inventories from

€87.8 million in the previous year to €80.2 million.

While pension obligation rose by a moderate €2.5 million to €64.7 million following the adjustments made in

previous year in connection with the accounting law modernization act (Bilmog), total provisions rose by €3.1

million. the significantly improved results for the year meant, in particular, rises in equity due to the increase

in the balance sheet profit to €68.2 million, as well as increased liabilities to shareholders to €144.0 million.

financial position

cash flow from current business activities came to €65.5 million (compared with €23.2 million in the previous

year) and covered the group’s investment and financing activities. cash and cash equivalents went up by

€47.1 million to €75.5 million.

purchaSInG

restocking times have now stabilized, albeit at a very high level, following the global supply crisis last year.

pressure was put on the procurement market by the disaster in Fukushima, Japan, as well as by the floods in

thailand. production failures by suppliers were offset to a significant degree by making increasing use of

alternative suppliers, meaning that the sennheiser group experienced no noticeable production failures.

the procurement situation started to stabilize from the end of the third quarter.

the planned procurement budget for 2011 was undercut slightly despite the significant increase in the procure-

ment of electronic components on the over-priced broker market as well as disproportionate price increases for

so-called “rare earth elements”.

the percentage of purchases made in the Us dollar zone fell slightly year on year to approximately 73%.

procurement costs are expected to continue to rise; electricity, raw materials and wages tend to go up over the

long term. Wage costs on the chinese labor market in particular will double in the coming 4 to 5 years. political

instability and social crises in some key raw materials countries lend additional momentum to this trend and

may also result in sporadic supply problems.

We will prepare for this eventuality accordingly by making advance plans and by further expanding our range

of alternative sources.

[ oUtlooK ]

Wireless microphones 26.4 %

TurnOVEr By prODucT GrOup

in %

headphones 32.9 %

Sennheiser communications 9.2 %

Wired microphones 7.4 %

audiology 6.0 %

professional headsets 4.8 %

Georg neumann 3.6 %

Integrated Systems 3.3 %

Other 6.4 %

[ oUtlooK ]

[ development in 2011 ]

consolidated management report 2011

60

consolidated management report 2011

61

prODucTIOn cOmpanIES

the production site in Wennebostel posted a 21% year–on-year jump in turnover in 2011 as against 2010. this

increase was mainly the result of increased turnover from wireless microphones in almost all product lines. 2011

was highlighted by optimization. the location’s competitiveness was improved for the long term using instru-

ments such as cip workshops, value flow analyses and shop floor management. the go-ahead was given for an

effective system of performance indicators (Kpi) to optimize production controlling, as well as to make utiliza-

tion and cost deviations transparent.

the irish sennheiser site in tullamore saw sales of headphones rise. this, together with a decline in the sales of

acoustic transducers, resulted in a slight drop in turnover overall as against 2010. sennheiser consumer electron-

ics gmbH’s sites in tullamore and singapore together posed a decline in turnover of 23%; this was as a result of

a targeted and structured reduction in headphone inventories following a buildup in 2010. the key innovation

at the tullamore site in 2011 was the 24/7 shift pattern introduced for the so-called cam (chassis assembly

machine), used for the fully automated production of high-grade headphone transducer chasses. While the

KH 120 speaker was added to the production range at tullamore, manufacturing continues to focus on head-

phone transducers and headphones.

the site in albuquerque, new mexico, Usa was marked in 2011 by the switch from direct deliveries to the

american sennheiser electronic corporation subsidiaries to supplying logistics company sennheiser logistics

services gmbH (sls) from the warehouse in chicago. sennheiser developed its own lean management roadmap

in new mexico, increasing the efficiency of material flow by adjusting the site layout. annual turnover remained

stable.

the sites in Wennebostel, tullamore and albuquerque have been part of the supply chain division organizational

structure since 2011. the division will formulate a multi-year strategy in 2012 and increase efficiency and output

in the medium term using profitable and innovative projects. technical measures to modernize the manufactur-

ing of microphones and high-quality headphones were implemented in 2012. a more precise manufacturing

cost analysis will uncover immediate optimization potential using the performance indicators.

lOGISTIcS

last year saw the construction of the central warehouse and associated distribution logistics completed.

the central warehouse in chicago was incorporated into sls at the beginning of the second quarter. ever since,

the Us B2B and B2c market has largely been supplied by sls from chicago.

the B2c project in europe for sennheiser France s.a.r.l. was completed in september 2011. French customers

are now largely supplied directly from the central warehouse in osnabrück.

the share of B2c deliveries for sennheiser electronic asia pte ltd. from the central warehouse in Hong Kong was

increased further, which then reduced delivery transport and handling costs even more.

turnover-related logistics costs fell by 20% year on year by significantly cutting consumer product air freight,

cheaper freight rates as well as additional cost cutting.

this year we aim to optimize processes once the central warehouse structure and the relating distribution

structure have been implemented. the key objectives here are improving product availability and delivery reli-

ability as well as increasing supply chain efficiency.

QualITy manaGEmEnT

the adjustment to the organizational structure in line with the redefined structure in 2010 was successfully

completed in 2011. the approach selected for the project – to use employees’ initiative to clarify interfaces and

responsibilities – was a resounding success. some of the modifications to the organizational structure under-

taken during the course of the year support the initiated process and the willingness to strive for continuous

improvement.

the certification of the quality management system pursuant to iso 9001 since 1994 was successfully main-

tained. our certificate was renewed following an audit carried out in February 2012. despite already possessing

much experience with this management system, the change in certification partner – after many years of posi-

tive and successful cooperation with the previous provider – revealed new aspects and ideas of how to continue

to improve our processes and procedures.

We will assess the form and function of our process documentation in the course of introducing and disseminat-

ing the idea of lean management within our company. the realignment to be implemented will result in leaner

documentation, consequently designed to deliver added value for those both involved in and responsible for

the processes. it will also avoid unnecessary work.

[ oUtlooK ]

[ oUtlooK ]

[ oUtlooK ]

[ development ]

[ development ]

[ development ]

consolidated management report 2011

62

consolidated management report 2011

63

human rESOurcES entWicKlUng

the sennheiser group’s average staffing level rose by 3.1% in 2011 to 2,183 employees. this included 75 trainees

(compared with 67 in the previous year). at the end of the year, the number of sennheiser group employees

came to 2,248 (previous year: 2,140). on average, 54% of all employees were working for companies within

germany and 46% for companies abroad. personnel costs rose by 4.1% in comparison with the previous year.

this increase was in part due to the increased number of employees and in part to higher variable remuneration

on account of the company’s success.

on average, 30 temporary workers were employed in manufacturing over the course of 2011 in light of the

continued improvements in the business situation. a works agreement was also drawn up. the agreement

almost places temporary workers on an equal footing with sennheiser employees on the basis of an equal pay

scheme.

InVESTmEnTS

sennheiser electronic gmbH & co. Kg invested €6.5 million in 2011. €0.3 million of investments in tangible assets

were for technical equipment and machinery and €3.7 million for furniture and equipment. the subsidiaries

primarily invested in the following: €0.9 million for tangible and intangible assets at the irish production site,

€1.7 million at the singapore site and €0.3 million at the Us production site.

rESEarch anD DEVElOpmEnT (r&D)

the year opened with the launch of the sophisticated cXc 700 travel earphones, the first sennheiser travel line

model equipped with digital noisegard technology. in order to improve everyday listening pleasure, a total of

seven new models were added to the Hd 200 and 400 series, while the earphones ie 60 and ie 80 from the

professional earphone series, which were presented at the iFa 2011 in Berlin, were aimed at demanding users.

the digital rs 220 headphones, which set new sound quality standards for wireless audio transmission, were

also presented at the iFa.

the lineup of sennheiser communications Bluetooth headsets was boosted in 2011 with the addition of the

awarding-winning vmX 200 model. other new products launched for voip applications were then joined at the

end of the year by X 320, a headset designed together with professional “gamers” especially for long Xbox®

gaming sessions.

the award-winning dect wireless series dW office, launched in 2010, was upgraded in 2011 especially for certi-

fied version of microsoft lync (soft phone). this strategic partnership with microsoft is a sennheiser communica-

tions milestone and opens up new Unified communications channels and business areas. the wired circle cc&o

headset range was presented at the end of the year; this was met with a very enthusiastic response from our

sales partners.

at the time of the american namm music trade fair in January 2011, sennheiser had already added the mK4

large-diaphragm microphone, a high-quality recording microphone, to its portfolio for professional users. in

time for the german equivalent of prolight + sound in april 2011, sennheiser added new versions of the suc-

cessful evolution-wireless production family in the attractive 1.8 gHz frequency range to its wireless communi-

cations systems.

the two shotgun microphones mKH 8060 and 8070 series were presented for the first time in march at the

broadcast naB trade fair in las vegas; their natural sound mean that these come highly recommended for use

at sports events and film productions as either analog or digital microphones. a neumann microphone interface

is now available in the form of the dmi-2 portable that supports digital microphones and allows the set up to

be changed directly at the units themselves. in 2011, neumann also presented the KH 120, the first product

with a new range of neumann studio monitors. the KH 120 embodies state-of-the-art acoustic and electronic

simulation and measuring technologies, opening up what is a new and very promising market for sennheiser.

sennheiser presented a new pilot headset for the aviation market with fully adaptive digital noise canceling

technology in the form of the s1 digital at the oshkosh flight trade fair in summer 2011.

essential functions have been added to the adn discussion and conference system in the integrated systems

portfolio since november 2011. the portfolio has now been rounded off. this system allows up to 400 people

to participate in conferences, which are then saved electronically.

EmplOyEES

change from previous year, in percent

2,500

2,000

1,500

1,000

500

0

2007 2008 2009 2010 2011

1,976

2,117 +7.1 %

2,132 +0.7 %

2,117 –0.7 %

2,183 +3.1 %

1,177 germany

54 %

1,006 abroad

46 %

[ development ]

consolidated management report 2011

64

consolidated management report 2011

65

———risk management

sennheiser has a controlling system that monitors and manages all business processes within the group. it

quickly and effectively counteracts deviations. the transparency of structures and processes was increased in

2011 as a result of a group-wide divisional reorganization. this went hand in hand with the development of

strategic and operational planning and reporting tools – which will continue to be developed in the future – for

analyzing and assessing medium- and long-term opportunities and risks.

in financial year 2011, sennheiser made better use than most of positive worldwide economic developments

and continued its growth trend from the previous year. But the future growth of the sennheiser group will still

depend on the economic changes around the world. in order to disperse risks, the sennheiser group will continue

to focus on different business areas. increased investments in brand development, particularly in north america

and asia, will help to reduce the company’s dependence on the general economic situation.

liquid resources, inasmuch as they are not required by subsidiaries for daily business, are concentrated in the

parent company on the basis of a cash pooling program. cash and cash equivalents are deposited with several

banks and are mainly denominated in euros. as in the past, sennheiser implemented a conservative investment

strategy with the aim of minimizing default risks in 2011. Fluctuations of sennheiser’s most important trading

currencies once again had a significant impact on business developments in 2011. the high percentage of

turnover generated in Us dollars again created currency risks in 2011. these were successfully offset by conclud-

ing an increasing number of purchases in the Us dollar zone, a strategy that the company has been continuously

employing for years.

sennheiser counteracts the general default risk with not only effective customer management, but also an

overall broadly diversified customer structure.

the globally valid property, liability and transport insurance policy covers the interests of the entire group,

including all affiliated companies. a group-wide insurance policy is also in place to protect against reciprocal

risks within the sennheiser group and against consequential damages caused by defaulting suppliers. the brand

and product piracy risk has become a permanent threat for renowned manufacturers in the wake of globaliza-

tion. sennheiser cooperates with lawyers and authorities to effectively curb this risk. the implemented measures

include crackdowns, seizing of products by customs, shutting down trade stalls and legal action against parties

in breach of industrial property rights. in 2011, sennheiser again increased its cooperation with competitors,

especially in asia, to increase the effectiveness of these measures.

the re-allocation of the majority of UHF frequencies for new digital applications (dvB-H, wireless broadband

internet, etc.) and the resulting threat to the frequency resources that have traditionally been used by profes-

sional wireless microphone and monitoring systems has already started. the implementation process is still in

its infancy and will take many years in germany and across all of europe. the attempt of large companies to

establish cognitive devices for the transfer of data that use the UHF band poses a further risk to the uninter-

rupted use of this frequency range for wireless production tools. For some years now, sennheiser has been

preparing for the restriction of the UHF spectrum to provide its customers with disruption-free productions and

therefore safe investments in the future. these measures include the development of cognitive technologies

and the lobbying of the negative impact of these developments to decision-makers in politics and

administration.

———outlook For Future development

the restructuring of sennheiser group into seven divisions was completed in financial year 2011. internal pro-

cesses and systems have also been following this new way of thinking since January 1, 2012. this changeover

saw the renaming of the installed sound division to integrated systems, the move following efforts to reflect

the new status quo. the executive management Board has been complete since mid-2011 when peter claussen

was appointed president, integrated systems division.

the new organization will increase the focus on customer benefits and specific requirement, thereby forming

the basis for future growth, a stable operating position as well as for flexibility in more volatile markets.

the company expects to further increase its turnover in the coming financial years. the new organizational

structure in particular will generate additional profitability.

Wennebostel, germany, march 31, 2012

the executive management Board

Volker Bartelspresident, corporate services, and speaker of the executive management Board

Dr. heinrich Esserpresident, professional systems

Daniel Sennheiserpresident, strategy and Finance

Consolidated FinanCial statements 2011

66

Consolidated FinanCial statements 2011

67

Consolidated FinanCial statements 2011

———Consolidated BalanCe sHeet as oF deCemBeR 31, 2011

ASSETS

2011 (€)

PReVioUs YeaR (€ in tHoUsands)

a. Fixed assets

i. intangible assets

1. Concessions, industrial property rights and similar rights 3,008,118.56 3,201

2. Goodwill 1,202,463.17 1,811

3. down payments 294,730.03 0

4,505,311.76 5,012

ii. tangible assets

1. Real estate, equivalent titles and buildings, including buildings on non-owned land

4,806,468.62 4,959

2. technical equipment and machinery 14,898,011.44 16,983

3. other plant, furniture and equipment 18,211,208.84 17,505

4. down payments and plants under construction 1,872,881.31 2,258

39,788,570.21 41,705

iii. Financial assets

1. shares in associated companies 13,250.00 13

2. shareholdings 3,350.00 3

3. loans 8,801.74 9

4. indemnity claims 1,427,416.85 1,528

1,452,818.59 1,553

45,746,700.56 48,270

B. Current assets

i. stocks

1. Raw materials and supplies 18,141,160.84 17,751

2. Work in process 13,351,597.24 13,127

3. Finished products and merchandise 48,666,082.55 56,930

4. down payments 82,780.80 0

80,241,621.43 87,808

ii. trade and other Receivables

1. trade receivables 93,333,225.36 86,864

2. other receivables 10,707,702.00 3,879

104,040,927.36 90,743

iii. trade investments

other securities 291.73 0

iV. Cash and Cash equivalents 70,997,234.11 33,717

255,280,074.63 212,268

C. accruals and deferrals 3,045,044.43 2,901

d. deferred taxes 11,068,816.55 14,566

315,140,636.17 278,005

LIABILITIES

2011(€)

PReVioUs YeaR(€ in tHoUsands)

a. equity

i. Fixed Capital

1. General partners’ share 0.00 0

2. limited partners’ share 5,200,000.00 5,200

5,200,000.00 5,200

ii. Retained earnings 23,931.37 24

iii. expenses from Currency translation –8,454,752.32 –10,218

iV. Balance sheet Profit 70,991,360.03 53,425

V. Balancing item for shares of other shareholders 481,689.14 482

68,242,228.22 48,913

B. special items 172,254.00 178

C. Provisions

1. Pension provisions 64,689,596.00 62,214

2. tax provisions 3,885,527.51 3,398

3. other provisions 34,177,716.84 34,101

102,752,840.35 99,713

d. liabilities

1. liabilities to credit institutions 353,374.08 197

2. advance payments received for orders 347,908.23 369

3. trade payables 27,604,198.27 26,882

4. liabilities to shareholders 101,589,931.33 82,322

5. liabilities to associated companies 3,223.12 3

6. other liabilities 14,055,426.32 19,337

143,954,061.35 129,110

e. accruals and deferrals 19,252.25 91

315,140,636.17 278,005

Consolidated FinanCial statements 2011

68

Consolidated FinanCial statements 2011

69

Consolidated PRoFit and loss statement FoR tHe FinanCial YeaR 2011

2011(€)

PReVioUs YeaR(€ in tHoUsands)

1. sales 531,441,113.47 468,234

2. Reduction (–)/increase of the inventory of finished and semi-finished products

–8,039,812.68 26,087

3. other own work capitalized 1,331,588.86 2,660

524,732,889.65 496,981

4. other operating income 28,391,023.63 40,969

553,123,913.28 537,950

5. Raw materials and consumables

a) expenditure on raw materials and supplies and on bought-in goods

180,075,623.13 193,253

b) expenditure on bought-in services 4,515,761.38 3,454

184,591,384.51 196,707

6. Personnel costs

a) Wages and salaries 120,644,062.09 117,797

b) social charges and expenditure on pensions and assistance

24,025,585.97 21,211

144,669,648.06 139,008

7. amortization and depreciation on

a) intangible assets and tangible assets 13,834,188.96 14,248

b) current assets exceeding the usual depreciation 2,585,265.19 0

16,419,454.15 14,248

8. other operating expenses 143,889,634.75 144,978

63,553,791.81 43,009

9. income from trade investments 24.00 0

10. other interest and similar income 358,597.33 105

11. interest and related expenses 5,267,940.11 4,856

–4,909,318.78 –4,751

12. Result of ordinary activities 58,644,473.03 38,258

13. extraordinary expenditures/extraordinary result 0.00 8,599

14. taxes on income and profits 12,483,747.95 5,657

15. other taxes 478,695.25 403

16. net profit for the year 45,682,029.83 23,599

(of which attributable to minority shareholders) 3,006,873.61 3,259

notes on Consolidated FinanCial statements 2011

70

notes on Consolidated FinanCial statements 2011

71

notes on Consolidated FinanCial statements

———notes on Consolidated FinanCial statements as oF deCemBeR 31, 2011

A. GEnErAL

the Consolidated Financial statements 2011 were prepared in accordance with the German Commercial Code

(HGB).

the company is required by section 264a of the German Commercial Code (HGB) in conjunction with section 290

HGB to prepare consolidated financial statements and a consolidated management report.

B. rEporTInG EnTITy

included in the consolidated financial statements are the parent company sennheiser electronic GmbH & Co. KG,

Wennebostel, the six sennheiser Group subsidiaries in Germany and 18 in other countries, as well as the joint

venture sennheiser Communications a/s based in Copenhagen, denmark.

all subsidiaries are majority owned with the exception of sennheiser Communications a/s, where the holding

is 50%. the following table provides an overview of all consolidated subsidiary companies:

siZe oF HoldinG (in %)

CUR-RenCY

sHaRes oFeQUitY (in

tHoUsands)

Full Consolidation

sennheiser electronic GmbH & Co. KG, Wennebostel, Germany – eUR 5,200

Georg neumann Gesellschaft mit beschränkter Haftung, Berlin, Germany 100.0 eUR 8001

K+H Vertriebs- und entwicklungsgesellschaft mbH, Wedemark, Germany 100.0 eUR 251

sennheiser Consumer electronics GmbH, Wedemark, Germany 100.0 eUR 12,1911

– sennheiser new mexico llC, albuquerque, Usa 100.0 Usd 5,000

– sennheiser manufacturing Usa Corp., albuquerque, Usa 100.0 Usd 2

– sennheiser Bondholding Company llC, albuquerque, Usa 100.0 Usd 2

sennheiser Global operations GmbH, Wedemark, Germany 100.0 eUR 3,500

– sennheiser audio ooo, moscow, Russia 100.0 RUB 3,340

– sennheiser Belux B.V.B.a., Zellik, Belgium 100.0 eUR 150

– sennheiser (Canada) inc., Point Claire, Canada 100.0 Cad 230

– sennheiser electronic asia Pte ltd., singapore 100.0 Usd 338

– sennheiser electronic Corporation, old lyme, Usa 100.0 Usd 2

– sennheiser electronics (Beijing) Co. ltd., Beijing, China 100.0 CnY 6,856

– sennheiser electronics india Private limited, Haryana, india 100.0 inR 70,000

– sennheiser France s.a.R.l., ivry sur seine, France 100.0 eUR 305

– sennheiser Hong Kong ltd., Hong Kong, China 100.0 HKd 10

– sennheiser Japan K.K., tokyo, Japan 100.0 JPY 90,000

– sennheiser mexico s.a. de C.V., mexico City, mexico 100.0 mXn 215

– sennheiser nederland B.V., almere, netherlands 100.0 eUR 182

– sennheiser nordic a/s, Copenhagen, denmark 100.0 dKK 1,000

– sennheiser UK ltd., High Wycombe, Great Britain 100.0 GBP 210

sennheiser innovation (schweiz) aG, Zurich, switzerland 100.0 CHF 100

sennheiser logistics services GmbH, Wedemark, Germany 100.0 eUR 251

sennheiser Vertrieb und service GmbH & Co. KG, Hanover, Germany 53.0 eUR 1,000

Partial Consolidation

sennheiser Communications a/s, Copenhagen, denmark 50.0 dKK 2,000

1 Profit and loss transfer agreement with sennheiser electronic GmbH & Co. KG, Wennebostel, Germany

2 Contained in the annual accounts of sennheiser new mexico llC, albuquerque, Usa

the equity figures shown here represent the shareholder equity as presented in the balance sheet as of december

31, 2011.

in accordance with section 296, subsection 2, HGB, the subsidiary sVs Beteiligungs GmbH, Hanover, Germany,

with a holding of 53%, is recognized at acquisition cost rather than being fully consolidated, because it is of

minor significance.

notes on Consolidated FinanCial statements 2011

72

notes on Consolidated FinanCial statements 2011

73

C. prInCIpLES of ConSoLIdATIon

the accounting and valuation principles used throughout the Group correspond to those applied in the annual

financial statements of the parent company and to the consolidating accounting standards laid down under

commercial law (section 308, subsections 1 and 2 HGB).

For the individual annual financial statements included in this report, the common balance sheet date is

december 31, 2011.

the individual annual financial statements denominated in foreign currencies were translated in accordance

with section 308a HGB. With the exception of equity, items were converted at the mean exchange rate. equity,

with the exception of the results for the year, is calculated using historic exchange rates. Conversion of the profit

and loss items is on the basis of weighted average exchange rates. the currency conversion differences resulting

from the conversion of equity capital at historic exchange rates and the conversion of the Profit and loss

statement at average exchange rates are shown in the equity capital as not affecting the operating results.

Foreign exchange losses or gains contained in the individual financial statements included in the consolidation

are recognized as affecting the net income reported for the year.

the following rates of exchange were employed for the currency conversion of the individual financial statements

of foreign subsidiaries:

Code Rate oF eXCHanGe

average as of dec. 31, 2011Foreign currency/€

end of year on dec. 31, 2011Foreign currency/€

01. Us dollar Usd 0.71985 0.77286

02. Canadian dollar Cad 0.72597 0.75672

03. Pound sterling GBP 1.15281 1.19717

04. mexican peso mXn 0.05769 0.05540

05. Hong Kong dollar HKd 0.09247 0.09949

06. danish krone dKK 0.13424 0.13451

07. Russian ruble RUB 0.02437 0.02394

08. indian rupee inR 0.01531 0.01455

09. Japanese yen JPY 0.00906 0.00998

10. Chinese yuan CnY 0.11198 0.12257

11. swiss franc CHF 0.81191 0.82264

the average exchange rates were determined using weighted monthly average rates on the basis of the

sennheiser Group’s turnover development. Here, the monthly average exchange rates represent a monthly

average based on the daily rates. this method was adopted in order to approximate the transaction-related

exchange rates within the Group as closely as possible.

Capital consolidation for company acquisitions on or before december 31, 2009, was based on the book value

method. if this capital consolidation leads to a positive gain, it is depreciated on a linear basis over a useful life

of four years.

the negative difference from capital consolidation was assigned to balance sheet profit.

offsetting was undertaken on the basis of assigned values at the time of share purchase.

Receivables and payables involving the consolidated companies themselves are the subject of set-off.

internal sales and other internal income within the Group are offset against the corresponding expenses.

interim profits from finished goods and raw materials are charged against net income.

interim profits relating to fixed assets are charged against net income.

d. noTES on ThE ConSoLIdATEd BALAnCE ShEET

Intangible assets are valued at acquisition cost and are subject to scheduled linear depreciation over a useful

life between three and six years. Goodwill is generally amortized over a period of four years using the straight-line

method. the valuation of tangible assets is based on acquisition and/or production costs, subject to scheduled

depreciation over a useful life of two to 14 years for furniture and equipment as well as technical equipment

and machinery, and 50 years for buildings. movable fixed assets are always depreciated on a linear or declining

balance basis; depending on the useful life of the assets in question, a switch will be made to the linear method

when most appropriate. For the companies in Germany, in keeping with tax regulation changes that took effect

on January 1, 2008, collective items were established for minor assets as defined by section 6, subsection 2a,

of the German income tax act (estG). these collective items are written off at a rate of 20% per year in the year

of acquisition and in the subsequent four financial years.

in companies outside Germany, minor assets are written off in full in the year of acquisition and are shown as

disposals in the same year.

interests in subsidiaries not fully consolidated and in associated companies are shown on the assets side of the

balance sheet at acquisition cost. other loans are shown at acquisition cost.

indemnity claims from life insurance concluded for the coverage of pension obligations are recognized at the

tax asset value, which equates to the acquisition cost and the fair value. indemnity claims protected from the

claims of all other creditors were offset against the corresponding pension obligations.

notes on Consolidated FinanCial statements 2011

74

notes on Consolidated FinanCial statements 2011

75

Fixed assets are shown in the table on the next two pages.

statement oF asset additions and disPosals FoR tHe FinanCial YeaR 2011

(€) aCQUisition and PRodUCtion Costs aCCUmUlated dePReCiation net BooK ValUes

Jan. 1, 2011

Currency

differences additions disposals transfers dec. 31, 2011 Jan. 1, 2011

Currency

differences additions disposals dec. 31, 2011 dec. 31, 2011

Previous year

(€ in thousands)

i. intangible assets

1. Concessions, industrial property rights and similar rights

23,825,199.09 121,285.30 1,380,206.05 2,149,804.33 0.00 23,176,886.11 20,624,104.71 115,679.31 1,529,925.08 2,100,941.55 20,168,767.55 3,008,118.56 3,201

2. Goodwill 4,690,393.74 1,372.24 0.00 618,813.36 0.00 4,072,952.62 2,879,507.40 954.08 608,841.33 618,813.36 2,870,489.45 1,202,463.17 1,811

3. down payments 0.00 0.00 294,730.03 0.00 0.00 294,730.03 0.00 0.00 0.00 0.00 0.00 294,730.03 0

28,515,592.83 122,657.54 1,674,936.08 2,768,617.69 0.00 27,544,568.76 23,503,612.11 116,633.39 2,138,766.41 2,719,754.91 23,039,257.00 4,505,311.76 5,012

ii. tangible assets

1. Real estate, equivalent titles and buildings, including buildings on non-owned land

6,511,946.33 65,459.88 45,996.75 0.00 0.00 6,623,402.96 1,553,283.62 38,402.10 225,248.62 0.00 1,816,934.34 4,806,468.62 4,959

2. technical equipment and machinery 53,299,733.53 387,517.34 1,243,126.51 95,872.69 254,198.18 55,088,702.87 36,316,224.28 337,128.45 3,630,576.00 93,237.30 40,190,691.43 14,898,011.44 16,983

3. other plant, furniture and equipment 72,245,332.96 465,340.65 7,862,382.84 5,183,374.09 1,163,933.31 76,553,615.67 54,740,736.37 533,681.55 7,839,597.93 4,771,609.02 58,342,406.83 18,211,208.84 17,505

4. down payments and plants under construction 2,258,215.65 543.55 1,464,824.58 432,570.98 –1,418,131.49 1,872,881.31 0.00 0.00 0.00 0.00 0.00 1,872,881.31 2,258

134,315,228.47 918,861.42 10,616,330.68 5,711,817.76 0.00 140,138,602.81 92,610,244.27 909,212.10 11,695,422.55 4,864,846.32 100,350,032.60 39,788,570.21 41,705

iii. Financial assets

1. shares in associated companies 13,250.00 0.00 0.00 0.00 0.00 13,250.00 0.00 0.00 0.00 0.00 0.00 13,250.00 13

2. shareholdings 3,350.00 0.00 0.00 0.00 0.00 3,350.00 0.00 0.00 0.00 0.00 0.00 3,350.00 3

3. loans 8,972.17 21.21 8,201.73 8,393.38 0.00 8,801.73 0.00 0.00 0.00 0.00 0.00 8,801.73 9

4. indemnity claims 1,527,451.19 0.00 0.00 100,034.34 0.00 1,427,416.85 0.00 0.00 0.00 0.00 0.00 1,427,416.85 1,528

1,553,023.36 21.21 8,201.73 108,427.72 0.00 1,452,818.58 0.00 0.00 0.00 0.00 0.00 1,452,818.58 1,553

164,383,844.66 1,041,540.17 12,299,468.49 8,588,863.17 0.00 169,135,990.15 116,113,856.38 1,025,845.49 13,834,188.96 7,584,601.23 123,389,289.60 45,746,700.55 48,270

notes on Consolidated FinanCial statements 2011

76

notes on Consolidated FinanCial statements 2011

77

Inventories are separately valued at acquisition cost, subject to allocated surcharges and discounts for incidental

acquisition costs and acquisition cost reductions, or at production cost in accordance with section 255, subsec-

tion 2 HGB. Production costs include individual costs as well as pro-rata allocated material overheads, production

overheads and depreciation insofar as it is related to production. the lower of cost or market principle is applied.

marketability discounts, taking product releases into account, were applied as required and retrograde valuation

was followed.

Trade and other receivables are shown at nominal value. any necessary itemized and general provisions are

set aside for bad and doubtful debts. Receivables denominated in foreign currencies were converted at the

mean exchange rate on the balance sheet date. of the trade receivables, an amount of €750,000 (€62,000 in

the previous year) have a remaining term to maturity of more than one year. of the other receivables, an amount

of €803,000 (€233,000 in the previous year) have a remaining term to maturity of more than one year.

other trade investments are valued at acquisition cost.

Cash and cash equivalents are valued at nominal value.

Accruals and deferrals on the assets side of the balance sheet are stated in the amount of expenditure for the

period following the balance sheet date.

deferred taxes result from temporary differences between balance sheet items under commercial law and for

tax purposes, as well as consolidation entries. in case of temporary differences arising from consolidation entries,

an average tax rate of 25% (previous year: 25%) was applied. in determining deferred taxes arising from tem-

porary differences between balance sheet items under commercial law and for tax purposes, local tax rates

between approximately 8% and 43% were applied. deferred taxes continue to be accrued on losses carried

forward. on the balance sheet date, the deferred taxes on losses carried forward were €1.975 million (previous

year: €2.980 million). the remaining deferred tax assets of €10.016 million result from differences in fixed assets

and inventories, receivables, liabilities and provisions. deferred tax liabilities of €797,000 mainly relate to dif-

ferences in fixed assets. in accordance with the accounting policy choice under section 274, subsection 1, sen-

tence 3 HGB, only the net amount of deferred taxes is reported. offsetting results in net deferred tax assets of

€11.069 million.

the fixed capital is shown at the nominal amount of the parent company’s general and limited liability capital.

the balance sheet profit includes a profit brought forward of €53.425 million. the consolidation operations

affecting net income are shown in the profit brought forward as at the end of the previous year. the difference

shown on the liabilities side of the balance sheet arising from the capital consolidation has arisen through profit

retentions by subsidiaries prior to initial consolidation and therefore has the nature of profit brought forward.

the net profit of the parent company and the proportion of the consolidated net profit owing to minority

shareholders are credited to the company clearing accounts and are thus not included in the balance sheet profit.

Special items contain the investment subsidies and advance payments granted to sennheiser Consumer

electronics GmbH, Branch ireland, tullamore, ireland, by the industrial development agency for establishing the

irish production facility. the amortization of this special item for investment allowances on fixed assets cor-

responds to the scheduled depreciation on the subsidized fixed assets. Under the terms of the contract, liability

for part repayment of the allowances received may arise in certain circumstances.

in accordance with the accounting law modernization act (BilmoG), pension provisions were generally valued

according to the projected unit credit method (PUC method) at an interest rate of 5.14% (5.16% in the previous

year), a pay trend of 2.5% and a pension trend of 1.5% annually. the interest rate is based on the average market

interest rate for the last seven years determined by the deutsche Bundesbank, which is derived under the

assumption of a remaining term of 15 years. the actuarial tables 2005 G by Klaus Heubeck were applied.

in accordance with section 246, subsection 2, sentence 2 HGB, the tax asset values (€55,000), equating to the

acquisition cost and the fair value, from reinsurance that are protected from the claims of all other creditors

and serve exclusively to meet pension obligations or similar long-term commitments were offset against said

obligations (€55,000).

Pension provisions include provisions for obligations to previous members of the executive team of €3.127

million (previous year: €2.930 million).

in the financial result, income of €2,000 from fund assets (€2,000 in the previous year) was offset against

interest expense of €2,000 resulting from imputed interest on pension obligations (€2,000 in the previous year).

the allocation of tax provisions and other provisions is at the discharge amount in accordance with sound

business judgment and takes into account all recognizable risks from pending contracts and uncertain liabilities.

interest on other provisions with a term of more than one year is calculated at rates of interest as published by

deutsche Bundesbank. inflation is set at 1.69%. the interest rate for 2011 applied to discounting provisions

amounts to between 3.94 and 4.86% depending on the remaining term. Provisions with remaining terms of less

than one year are not discounted.

Liabilities are valued at their repayment and/or discharge amount.

they are as follows:

notes on Consolidated FinanCial statements 2011

78

notes on Consolidated FinanCial statements 2011

79

(€ in tHoUsands) RemaininG teRm

total Up to one year more than five years

dec. 31, 2011 Previous year dec. 31, 2011 Previous year dec. 31, 2011 Previous year

liabilities to credit institutions 353 197 353 197 0 0

advance payments received for orders 348 369 348 369 0 0

liabilities to shareholders 101,590 82,322 101,590 82,322 0 0

trade payables 27,604 26,882 27,604 26,882 0 0

liabilities to associated companies 3 3 3 3 0 0

other liabilities 14,056 19,337 13,678 19,153 0 0

143,954 129,110 143,576 128,926 0 0

other liabilities include tax liabilities in the amount of €4.702 million (previous year: €4.901 million) and social

security liabilities of €1.465 million (previous year: €1.103 million). no warranties or other safeguards exist.

E. noTES on ThE ConSoLIdATEd profIT And LoSS STATEmEnT

sales are structured as follows:

(€ millions) 2011 PReVioUs YeaR

Headphones 174.6 163.4

Wireless microphones 140.2 119.6

sennheiser Communications 49.0 37.7

Wired microphones 39.4 34.8

audiology 31.9 30.9

Professional Headsets 25.8 20.9

Georg neumann 19.1 16.7

integrated systems 17.5 15.6

other Products 33.9 28.6

sales 531.4 468.2

sales broken down into geographical markets are as follows:

(€ millions) 2011 PReVioUs YeaR

americas 133.6 125.6

aPaC 73.0 59.7

emea 324.8 282.9

sales 531.4 468.2

the emea region stands for the economic area that includes europe, the middle east and africa. of the european

sales, €88.696 million (previous year: €79.596 million) were earned in Germany.

other operating income includes €6,000 (€7,000 in the previous year) from the dissolution of the special items

for investment allowances on fixed assets. other operating income also includes income unrelated to the account-

ing period amounting to €2.625 million (€875,000 in the previous year), which mainly resulted from the release

of provisions and reserves for bad debts. Currency translation gains amounted to €22.235 million (€36.898

million in the previous year).

personnel costs include pension expenses in the amount of €4.036 million (previous year: €2.644 million).

on the annual average, the company had a staff of 2,183 employees (previous year: 2,117), of whom 75 (previous

year: 67) were trainees.

(€ millions) 2011 PReVioUs YeaR

Within Germany 1,177 1,153

abroad 1,006 964

2,183 2,117

these figures include the full number of employees in the partially consolidated sennheiser Communications

a/s (89, compared with 83 in the previous year).

amortization of current assets to the extent that this exceeds that normal for the company relate to inventory

provisions.

other operating expenses include expenses not related to the accounting period in the amount of €1.709 million

(previous year: €1.086 million), which are mainly the result of reserves for bad debts. other operating expenses

also include the auditor’s fee for the audit of the consolidated financial statements for financial year 2011 in

the amount of €398,000, consisting of €269,000 for the audit, €1,000 for other audit services, €56,000 in tax

consultancy fees and €72,000 for other services. Currency translation losses amounted to €22.066 million (€35.325

million in the previous year).

Interest income includes proceeds from discounting provisions in the amount of €50,000 (€35,000 in the previous

year). interest expense includes expenditures for imputed interest on provisions in the amount of €3.313 million

(€3.195 million in the previous year).

Income taxes include expenses from deferred taxes in the amount of €3.476 million.

notes on Consolidated FinanCial statements 2011

80

notes on Consolidated FinanCial statements 2011

81

Regarding disclosure, the following subsidiaries in the legal form of a limited company or partnership within the

meaning of section 264a HGB have made use of the exemption rule in accordance with section 264, sub section 3,

and section 264b HGB:

– Georg neumann Gesellschaft mit beschränkter Haftung, Berlin, Germany,

– K + H Vertriebs- und entwicklungsgesellschaft mbH, Wedemark, Germany,

– sennheiser Consumer electronics GmbH, Wedemark, Germany,

– sennheiser logistics services GmbH, Wedemark, Germany,

– sennheiser Vertrieb und service GmbH & Co. KG, Hanover, Germany.

the parent company, in the form of a limited company within the meaning of section 264a HGB, makes use of the exemption rule in accordance with section 264b HGB as the parent company producing the financial

statements.

Wennebostel, Germany, march 31, 2012

sennheiser electronic GmbH & Co. KG

the executive management Board

f. fInAnCIAL oBLIGATIonS

other financial obligations

on the balance sheet date, there were rent and leasing obligations in the amount of €30,548 million.

there were also vehicle leasing liabilities in the amount of €773,000 and an obligation to order of €41.733 million.

in addition, there are liabilities of €934,000 resulting from hardware and software maintenance contracts.

G. oThEr STATuTory InformATIon

The unlimited partner of the parent company is sennheiser Beteiligungsgesellschaft mit beschränkter Haftung,

Wedemark, whose subscribed capital amounts to €30,000.

the management of sennheiser electronic GmbH & Co. KG is the responsibility of sennheiser Beteiligungs-

gesellschaft mit beschränkter Haftung, Wedemark.

the following persons were appointed as Presidents, collectively representing sennheiser Beteiligungsgesellschaft

mit beschränkter Haftung, Wedemark:

Volker Bartels, Hanover, Germany, President, Corporate services, and speaker of the executive management

Board (emB)

dr. Heinrich esser, Wedemark, Germany, President, Professional systems

daniel sennheiser, Zurich, switzerland, President, strategy and Finance

Peter Claussen, Burgwedel, President, integrated systems (effective august 1, 2011)

dr. andreas sennheiser, isernhagen, President, supply Chain (effective January 1, 2012)

during the year under review, the members of the Supervisory Board were:

Prof. dr. Jörg sennheiser, Chairman, Wedemark, Germany,

dr. Frank Heinricht, Chairman of the management of Heraeus Holding GmbH, Hanau, Germany,andreas dornbracht, managing director of aloys F. dornbracht GmbH & Co. KG armaturenfabrik, iserlohn,

Germany,

Johann soder, director of technology of seW-eURodRiVe GmbH & Co. KG, Bruchsal, Germany.

Total remuneration of the members of the executive team came to €1.463 million (€2.159 million in the previous

year) and that of the supervisory Board to €348,000 (€348,000 in the previous year).

Volker BartelsPresident, Corporate services, and speaker of the executive management Boardexecutive mange

dr. heinrich Esser President, Professional systems

daniel SennheiserPresident, strategy and Finance

notes on Consolidated FinanCial statements 2011

82

notes on Consolidated FinanCial statements 2011

83

(€ in tHoUsands) 2011 PReVioUs YeaR

Payment received from disposals of items of fixed assets 626 349

investments (–) in tangible assets –10,616 –10,740

investments (–) in intangible assets –1,675 –1,455

investments (–) in financial assets –8 –2

Cash flow from investment activities –11,673 –11,848

other changes in shareholders’ funds excluding net profits for the year

Cash flow from financing activities –7,084 –2,592

Changes in cash and cash equivalents 46,705 8,706

Change in cash and cash equivalents resulting from foreign

exchange and valuation effects407 631

Cash and cash equivalents at the start of the period 28,410 19,073

Cash and cash equivalents at the end of the period 75,522 28,410

ComPosition oF FinanCial FUnds

Cash and cash equivalents 70,997 33,717

ongoing obligations (–) to credit institutions –353 –197

Receivables from the cash pool 4,919 0

obligations from the cash pool (–) –41 –5,110

75,522 28,410

CasH FloW statement FoR tHe FinanCial YeaR 2011

(€ in tHoUsands) 2011 PReVioUs YeaR

Results of the year, including the shares of profits of minority shareholders

45,682 32,198

depreciation on items of fixed assets 13,834 14,248

depreciation on current assets exceeding the usual depreciation 2,585 0

increase in medium- and long-term provisions 2,071 2,571

decrease in indemnity claims 100 124

Changes in the special items –6 –7

Rate fluctuations relating to fixed assets –423 –1,533

Cash earnings according to dVFa/sG principles 63,843 47,601

increase in short-term provisions 969 12,269

loss from the disposals of items or fixed assets 278 186

increase (–) in inventories, trade receivables and other assets that are not allocated to the investment or financing activities

–45 –44,436

increase in trade payables and other liabilities that are not allocated to the investment or financing activities

417 7,526

Cash flow from current business activities 65,462 23,146

notes on Consolidated FinanCial statements 2011

84

notes on Consolidated FinanCial statements 2011

85

statement oF sHaReHoldeR’s eQUitY FoR tHe FinanCial YeaR 2011

(€) PaRent ComPanY minoRitY sHaReHoldeRs

shares Cumulative

other Group Result

General partners’

deposit

limited partners’

deposit

Group equity capital

generated

Balancing item

from the foreign

currency conversion

other neutral

transactions equity

minority

capital/equity Group equity

status as of dec. 31, 2010 0.00 5,200,000.00 48,115,771.56 –10,218,364.00 5,333,327.13 48,430,734.69 481,689.14 48,912,423.83

Credit to shareholder settlement accounts 0.00 0.00 –25,108,963.51 0.00 0.00 –25,108,963.51 –3,006,873.61 –28,115,837.12

Group net profit for the year 0.00 0.00 42,675,156.22 0.00 0.00 42,675,156.22 3,006,873.61 45,682,029.83

other group result 0.00 0.00 0.00 1,763,611.68 0.00 1,763,611.68 0.00 1,763,611.68

total group result 0.00 0.00 42,675,156.22 1,763,611.68 0.00 44,438,767.90 3,006,873.61 47,445,641.51

status as of dec. 31, 2011 0.00 5,200,000.00 65,681,964.27 –8,454,752.32 5,333,327.13 67,760,539.08 481,689.14 68,242,228.22

Previous year

status as of dec. 31, 2009 0.00 5,200,000.00 42,318,546.63 –12,426,088.89 5,333,327.13 40,425,784.87 470,000.00 40,895,784.87

Credit to shareholder settlement accounts 0.00 0.00 –14,566,847.66 0.00 0.00 –14,566,847.66 –3,258,594.67 –17,825,442.33

other changes 0.00 0.00 23,931.37 0.00 0.00 23,931.37 11,689.14 35,620.51

Group net profit for the year 0.00 0.00 20,340,141.22 0.00 0.00 20,340,141.22 3,258,594.67 23,598,735.89

other group result 0.00 0.00 0.00 2,207,724.89 0.00 2,207,724.89 0.00 2,207,724.89

total group result 0.00 0.00 20,340,141.22 2,207,724.89 0.00 22,547,866.11 3,258,594.67 25,806,460.78

status as of dec. 31, 2010 0.00 5,200,000.00 48,115,771.56 –10,218,364.00 5,333,327.13 48,430,734.69 481,689.14 48,912,423.83

notes on Consolidated FinanCial statements 2011

86

We have audited the consolidated financial statements – comprising the consolidated balance sheet, the con-

solidated profit and loss statement, the notes on the consolidated financial statements, the consolidated cash

flow statement and the consolidated statement of shareholder’s equity – and the consolidated management

report of sennheiser electronic GmbH & Co. KG, Wennebostel, Germany, for the financial year from January 1 to

december 31, 2011. the maintenance of the books and records and the preparation of the consolidated financial

statements and consolidated management report in accordance with German commercial law are the responsibil-

ity of the parent Company’s management. our responsibility is to express an opinion on the consolidated financial

statements and the consolidated management report based on our audit.

We conducted our audit of the consolidated financial statements in accordance with section 317 HGB and German

generally accepted standards for the audit of financial statements promulgated by the institut der Wirtschafts-

prüfer (German institute of auditors). those standards require that we plan and perform the audit such that

misstatements materially affecting the presentation of the net assets, financial position and results of operations

in the consolidated financial statements in accordance with German principles of proper accounting and in the

consolidated management report are detected with reasonable assurance. Knowledge of the business activities

and the economic and legal environment of the company and expectations as to possible misstatements are

taken into account in the determination of audit procedures. the effectiveness of the accounting-related internal

control system and the evidence supporting the disclosures in the books and records, the consolidated financial

statements and the consolidated management report are examined primarily on a test basis within the frame-

work of the audit. the audit includes assessing the annual financial statements included in the consolidated

financial statements, the definition of the reporting entity, the accounting and consolidation principles used

and significant estimates made by the management, as well as evaluating the overall presentation of the

consolidated financial statements and consolidated management report. We believe that our audit provides a

reasonable basis for our opinion.

our audit has not led to any reservations.

in our opinion, based on the findings of our audit, the consolidated financial statements of sennheiser electronic

GmbH & Co. KG, Wennebostel, Germany, comply with the legal requirements and give a true and fair view of the

net assets, financial position and results of operations of the company in accordance with German principles of

proper accounting. the consolidated management report is consistent with the consolidated financial statements

and, as a whole, provides a suitable view of the company’s position and accordingly presents the opportunities

and risks of future development.

Hanover, april 17, 2012

deloitte & touche GmbH

audit Firm

Prof. dr. Beine Ziegenbein

Wirtschaftsprüfer Wirtschaftsprüfer

[German Public auditor] [German Public auditor]

indePendent aUditoRs’ RePoRt

———

2011

An

nu

al R

epor

t

2011 Annual Report

In the depths of sound

0 – 20 Hz

www.sennheiser-annualreport.com

COVER PHOTOTo visualize infrasound, artist Martin Klimas used vibrating pigments on a loudspeaker membrane.

Infrasound has frequencies below 20 Hz. That is outside the threshold of human hearing.

080895 Printed in Germany