Harman Kardon 2011 Annual Report Download - page 60

Download and view the complete annual report

Please find page 60 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

to pay under the Guarantee and Collateral Agreement is the amount that we have borrowed under the Credit
Agreement, including outstanding letters of credit. At June 30, 2011, we had no borrowings under the Credit
Agreement and had outstanding letters of credit of $7.3 million.
Convertible Senior Notes
We had $400 million of Convertible Senior Notes outstanding at June 30, 2011 and June 30, 2010 which are
more fully described in Note 9 – Debt in the Notes to the Consolidated Financial Statements.
The Indenture contains covenants, one of which required us to calculate the ratio of Consolidated Total Debt
to Consolidated EBITDA, as defined in the Indenture, each time we incurred additional indebtedness, for the
most recently ended four quarter period (the “Incurrence of Debt Covenant”). On January 12, 2010, we entered
into a supplemental indenture to the Indenture (the “Supplemental Indenture”) which amended the Incurrence of
Debt Covenant. Under the Supplemental Indenture, we were permitted to, without complying with the ratio of
Consolidated Total Debt to Consolidated EBITDA of 3.25 to 1.00: (a) incur revolving extensions of credit under
the 2009 Credit Agreement, up to a maximum amount of $231.6 million, and (b) incur additional indebtedness,
subject to a requirement to make a pro rata offer to purchase a principal face amount of the Convertible Senior
Notes equal to 50 percent of the aggregate amount of such indebtedness so incurred, plus accrued and unpaid
interest thereon. The Incurrence of Debt Covenant lapsed on October 23, 2010, and was no longer applicable to
us after this date. At June 30, 2011, we were in compliance with all covenants under the Indenture, as amended,
and we believe that we will be in compliance with these covenants for at least the next 12 months.
Off-Balance Sheet Arrangements
We enter into operating leases for land, buildings and equipment in the normal course of business which are
not included in our Consolidated Balance Sheets. In addition, we had outstanding letters of credit of $7.3 million
and $6.6 million at June 30, 2011 and 2010, respectively that were not included in our Consolidated Balance
Sheets.
Contractual Obligations
We have obligations and commitments to make future payments under debt agreements and operating
leases. The following table details our financing obligations by due date:
Year Ending June 30,
($ in thousands) 2012 2013 2014 2015 2016 Thereafter Total
Short term borrowings(1) ................ $ 1,785 $ 0 $ 0 $ 0 $ 0 $ 0 $ 1,785
Current portion of long-term debt(1) ....... 386 0000 0386
Convertible senior notes(1) .............. 0 400,000000 0400,000
Firm commitments for capital
expenditures ....................... 20,112 0000 020,112
Purchase obligations(2) ................. 183,633 0000 0183,633
Capital leases(1), (3) ..................... 442 0000 0442
Non-cancelable operating leases(3) ........ 43,155 41,144 37,671 31,718 28,377 74,943 257,008
Uncertain tax positions(4) ............... 32,265 0000 032,265
Total contractual cash obligations ......... $281,778 $441,144 $37,671 $31,718 $28,377 $74,943 $895,631
(1) Refer to Note 9 – Debt in the Notes to the Consolidated Financial Statements for more information and for
interest payments associated with our short-term borrowings and long-term debt.
(2) Includes amounts committed under enforceable agreements for purchase of goods and services with defined
terms as to quantity, price and timing of delivery.
42