FORM 10-K - Harman

At June 30, 2009, we had $400 million of the Notes outstanding, which are more fully discussed below in
the section Convertible Senior Notes. The Indenture governing the Notes contains covenants, one of which
requires that we calculate the ratio of Consolidated Total Debt to Consolidated EBITDA, as defined in the
Indenture, for the most recently ended four quarter period, each time we incur additional indebtedness. We have
exceeded the minimum ratio for this covenant and, as a result, we will not be able to incur additional
indebtedness without obtaining a waiver from the holders of a majority in principal amount of the Notes. We do
not intend to incur additional indebtedness unless we obtain a waiver or are able to satisfy this covenant. If we
were to incur additional indebtedness at a time when we failed to meet the minimum ratio of Consolidated Total
Debt to Consolidated EBITDA (and without first obtaining a waiver), we would be in violation of our covenant
under the Indenture. If the violation is not remedied within 60 days, the Notes could become due, which would
have a material adverse affect on our financial condition and our results of operations, and would also lead to an
event of default under the Amended Credit Agreement and the acceleration of the loans thereunder. We believe
that we will be in compliance with these covenants for at least the next 12 months. The covenant prohibiting the
incurrence of additional debt expires on October 23, 2010.
Operating Activities
Net cash provided by operating activities in fiscal year 2009 was $78.7 million compared to $316.8 million
in fiscal year 2008. Operating cash flows decreased due to reduction of accounts payable, offset by collections of
receivables, higher restructuring accruals, an income tax refund and cash received from our deferred
compensation and SERP plans. At June 30, 2009, working capital, excluding cash and short-term debt, was
$177.0 million, compared with $294.9 million at June 30, 2008.
Investing Activities
Net cash used in investing activities was $67.0 million in fiscal year 2009, compared to $142.5 million in
fiscal year 2008. The fiscal year 2009 activity primarily reflects investments in our manufacturing facilities and
contingent purchase price consideration related to an acquisition made several years ago, partially offset by
proceeds received from the sale of certain of our speech recognition assets. Capital expenditures were $79.9
million in fiscal year 2009 and $138.9 million in fiscal year 2008. 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. Contingent purchase price consideration of $7.4 million was recorded in
connection with an acquisition we made in a prior year.
We expect capital expenditures in fiscal 2010 to approximate fiscal year 2009 levels.
Financing Activities
Net cash flows provided by financing activities were $376.0 million in fiscal year 2009 compared to $64.8
million used by financing activities in fiscal year 2008. The increase in cash flow in fiscal year 2009 compared to
the prior year was due primarily to an increase of $197 million of borrowings under the Amended Credit
Agreement and $189.7 million of cash received as a result of the recent public offering and issuance of shares of
our common stock, partially offset by the repayment of $38 million of net borrowings under the revolving credit
facility, as required under the First Amendment and $9.7 million of debt issuance costs and $2.2 million of
dividends paid to our shareholders.
Our total debt was $629.5 million at June 30, 2009 primarily comprised of $400 million of the Notes due in
2012 and $227.3 million outstanding under our revolving credit facility. We also had capital leases and other
long-term borrowings of $2.1 million at June 30, 2009.
Our total debt was $428.0 million at June 30, 2008 primarily comprised of $400 million of Notes and $25.0
million outstanding under our revolving credit facility. We also had capital leases and other long-term
borrowings of $3.0 million at June 30, 2008.
37