Harman Kardon 2010 Annual Report Download - page 60

proceeds received from the sale of the QNX Entities. Net cash provided by investing activities includes a $11.3
million decrease in cash related to the deconsolidation of the Harman Navis joint venture and capital expenditures
of $60.0 million compared to $79.1 million in fiscal year 2009. Capital spending was lower because the prior year
included more significant expenditures relating to the launch of new automotive platforms and a new manufacturing
facility in China. We expect that our run rate for capital expenditures will increase in fiscal year 2011.
Financing Activities
Net cash flows used in financing activities were $222.3 million in fiscal year 2010 compared to $376.0
million provided by financing activities in fiscal year 2009. The decrease was primarily due to a repayment of
$228.9 million under our Amended Credit Agreement in fiscal year 2010 compared to $235.0 million of
borrowings under our Amended Credit Agreement in fiscal year 2009 and $189.7 million of proceeds received
from an equity offering in fiscal year 2009.
Our total debt at June 30, 2010 was $364.4 million, primarily comprised of $400.0 million of the
Convertible Senior Notes, which are shown net of a discount of $37.3 million in our Consolidated Balance Sheet
at June 30, 2010 due to the adoption of new accounting guidance, which is more fully described in Note 1 –
Summary of Significant Accounting Polices in the Notes to the Consolidated Financial Statements. Also included
in total debt at June 30, 2010 is short-term debt of $13.5 million and capital leases and other borrowings of $1.7
million.
Our total debt at June 30, 2009 was $577.3 million primarily comprised of $400 million of the Convertible
Senior Notes due in 2012, which is shown net of a discount of $52.2 million due to the adoption of new
accounting guidance and $227.3 million of borrowings under the Amended Credit Agreement. Also included in
total debt are capital leases and other borrowings of $2.1 million.
Amended Credit Agreement
We are party to the Amended Credit Agreement. We repaid $228.9 million of outstanding borrowings under
the Amended Credit Agreement during the fiscal year ended June 30, 2010 (refer to the heading “Convertible
Senior Notes” below). At June 30, 2010, we had a total borrowing capacity of $231.6 million under the Amended
Credit Agreement, with $6.6 million of outstanding borrowings consisting of outstanding letters of credit and
$225.0 million of available borrowing capacity.
On March 31, 2009, we and one of our wholly-owned subsidiaries, Harman Holding GmbH & Co. KG
(collectively the “Borrowers”) entered into the Amended Credit Agreement, amending and restating the
Amended and Restated Multi-Currency, Multi-Option Credit Agreement dated June 22, 2006. The Amended
Credit Agreement, among other things, extended the maturity date from June 28, 2010 to December 31, 2011 and
reduced the maximum amount of available credit under the revolving credit facility from $300 million to $270
million. Interest rates for borrowings under the Amended Credit Agreement were increased to three percent
above the applicable base rate for base rate loans and four percent over LIBOR for Eurocurrency loans. In
addition, the annual facility fee rate payable under the Amended Credit Agreement increased to one percent. The
interest rate on our old revolving credit facility was based on LIBOR plus 37 to 90 basis points, plus a
commitment fee of 8 to 22.5 basis points. The interest rate spread and commitment fee were determined based
upon our interest coverage ratio and senior unsecured debt rating. In connection with the Amended Credit
Agreement, we incurred $9.7 million in fees and other expenses which have been capitalized within other current
assets and other assets in our Consolidated Balance Sheets and which are amortized over the term of the
Amended Credit Agreement as interest expense, net in our Consolidated Statements of Operations.
In connection with our public offering of common stock, described in Note 14 – Shareholder’s Equity and
Share-Based Compensation, on June 15, 2009, the Borrowers entered into the First Amendment to the Amended
Credit Agreement (the “First Amendment”). The purpose of the First Amendment was to reduce the Equity
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