Harman Kardon 2008 Annual Report Download - page 53

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Financing Activities
Net cash flows used in financing activities were $64.8 million in fiscal 2008 compared to $222.7 million
used in fiscal 2007. During fiscal 2008, we used $400 million to repurchase 7,224,779 shares of our
common stock under two separate accelerated share repurchase agreements. Since the inception of our
share repurchase program in June 1998 and including the shares acquired under the accelerated share
repurchase agreements, we have acquired and placed into treasury 25,422,861 shares.
Our total debt was $428.0 million at June 30, 2008 primarily comprised of $400 million of 1.25 percent
Convertible Senior Notes due in 2012 and $25.0 million under our revolving credit facility. We also had
capital leases and other long-term borrowings of $3.0 million at June 30, 2008.
At June 30, 2007, our total debt was $76.5 million primarily comprised of borrowings of $55 million
under our revolving credit facility and $16.5 million in outstanding principal amount of senior notes. The
senior notes had a stated interest rate of 7.32 percent and were due on July 1, 2007. These notes were
paid upon maturity. We also had capital leases and other long-term borrowings of $3.2 million at June
30, 2007. Short-term borrowings included in debt were $1.8 million at June 30, 2007.
We are party to a $300 million multi-currency revolving credit facility with a group of banks, which
under certain circumstances could have been increased to $350 million. This facility expires in June 2010
and replaces the $150 million revolving credit facility that expired on August 14, 2005. On June 22, 2006,
we amended and restated our multi-currency revolving credit facility. The Restated Credit Agreement,
among other things, added Harman Holding GmbH & Co. KG (“Harman Holding”), a limited partnership
organized under the laws of Germany and wholly-owned subsidiary of the Company, as an additional
borrower. The maximum principal amount of borrowings permitted under the Restated Agreement
remains at $300 million. The Restated Agreement also amends our conditional option to increase the
maximum aggregate revolving commitment amount from $350 million to $550 million. At June 30, 2008,
we had $25.0 million of borrowings under this credit facility and outstanding letters of credit of $6.0
million. Unused availability under the revolving credit facility was $269 million at June 30, 2008.
On October 23, 2007, we issued $400 million of 1.25 percent Convertible Senior Notes due 2012. The
initial conversion rate is 9.6154 shares of common stock per $1,000 principal amount of Notes (which is
equal to an initial conversion price of approximately $104 per share). The conversion rate is subject to
adjustment in specified circumstances as described in the indenture for the Notes. The Notes are
convertible under the specified circumstances set forth in the indenture for the Notes.
Upon conversion, a holder will receive in respect of each $1,000 of principal amount of Notes to be
converted an amount in cash equal to the lesser of (1) $1,000 or (2) the conversion value, determined in
the manner set forth in the indenture for the Notes and if the conversion value per Note exceeds $1,000,
the Company will also deliver, at its election, cash or common stock or a combination of cash and
common stock for the conversion value in excess of $1,000.
In May 2008, the Financial Accounting Standards Board (“FASB”) issued FSP APB 14-1, Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement) (“FSP APB 14-1”). FSP APB 14-1 requires the issuer of convertible debt instruments with
cash settlement features to account separately for the liability and equity components of the instrument.