Harman Kardon 2011 Annual Report Download - page 58

Download and view the complete annual report

Please find page 58 of the 2011 Harman Kardon annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 128

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128

Financing Activities
Net cash flows used in financing activities were $8.4 million in fiscal year 2011 compared to $222.3 million
in fiscal year 2010. The decrease was primarily due to a decrease in repayments under the revolving credit
facility of $228.9 million and an increase in share based compensation of $8.0 million, partially offset by a
decrease of $12.5 million in short-term borrowings, debt issuance costs of $7.0 million and the payment of $3.5
million in dividends.
In the third quarter of fiscal year 2011, our Board of Directors reinstated the payment of a cash dividend,
which had been suspended since the third quarter of fiscal year 2009. During fiscal year 2011, we paid cash
dividends of $0.05 per share, with a dividend of $0.025 paid in each of the third and fourth quarters only. During
fiscal year 2010, we did not pay any cash dividends. In June 2011, we announced an increase in our dividend for
fiscal year 2012 to $0.30 per share, to be paid quarterly at the rate of $0.075 per share.
Our total debt, including short-term borrowings, at June 30, 2011 was $402.6 million, or $381.0 million, net
of discount, and was primarily comprised of $400.0 million of the Convertible Senior Notes, which are shown
net of a discount of $21.6 million in our Consolidated Balance Sheet at June 30, 2011. Also included in total debt
at June 30, 2011 is short-term debt and capital lease obligations of $2.6 million.
Our total debt, including short-term borrowings, at June 30, 2010 was $415.2 million or $377.8 million, net
of discount, and was 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. Also included in total debt
at June 30, 2010 are short-term debt of $13.9 million and long-term capital leases and other long-term
borrowings of $1.2 million.
New Revolving Credit Facility
On December 1, 2010, we and one of our wholly-owned subsidiaries, Harman Holding GmbH & Co. KG
(“Harman KG”) , entered into a multi-currency credit agreement (the “Credit Agreement”) with a group of banks.
The Credit Agreement provides for a five-year secured revolving credit facility which expires on December 1,
2015 (the “Revolving Credit Facility”) in the amount of $550 million (the “Aggregate Commitment”), of which
up to $60 million will be available for letters of credit. Subject to certain conditions set forth in the Credit
Agreement, the Aggregate Commitment may be increased up to a maximum aggregate amount of $700 million.
The Credit Agreement effectively replaced our previous revolving credit facility, the second amended and
restated multi-currency, multi-option credit agreement dated March 31, 2009, as amended (the “2009 Credit
Agreement”), which had a maximum borrowing capacity of $231.6 million (the “2009 Maximum Borrowing
Capacity”), including outstanding letters of credit. As a result of such replacement, we voluntarily terminated the
2009 Credit Agreement. There were no outstanding borrowings under the 2009 Credit Agreement as of
December 1, 2010, and we incurred no early termination penalties due to the termination of the 2009 Credit
Agreement.
Interest rates for borrowings under the Revolving Credit Facility range from 0.875 percent to 1.375 percent
above the applicable base rate for base rate loans and range from 1.875 percent to 2.375 percent above the
London Interbank Offered Rate (“LIBOR”) for Eurocurrency loans based on our Total Leverage Ratio (as
defined below). In addition, we are obligated to pay an annual facility fee on the Aggregate Commitment,
whether drawn or undrawn, ranging from 0.375 percent to 0.625 percent based on our Total Leverage Ratio. Any
proceeds from borrowings under the Revolving Credit Facility may be used for general corporate purposes.
Interest rates for borrowings under the 2009 Credit Agreement were 3.0 percent above the applicable base
rate for base rate loans and 4.0 percent above LIBOR for Eurocurrency loans. In addition, the annual facility fee
rate payable under the 2009 Credit Agreement was one percent based on the 2009 Maximum Borrowing
Capacity, whether drawn or undrawn.
40